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Daimler-Mercedes Close In On Cooperation Pact

Don’t Do It, Pleads Morgan Stanley.

The much flagged cooperation deal between BMW and Daimler is moving closer, with arguments focusing on a possible cross shareholding agreement.

Der Spiegel magazine reported that Daimler and BMW might take seven per cent stakes in each other, in addition to the cooperation on the development of technology under the skin, and component buying. Apparently, according to Der Spiegel, the Quandt family, which owns 46 per cent of BMW, opposes this cross ownership.

Deutsche Bank warned that any benefits of cooperation would take years to achieve.

Commerzbank was more hopeful.

“We calculate that the combined purchasing volume amounts to come €60 billion and that short-term cost savings could amount to some €600 million. In our view there is even more potential in joint R&D – €1.4 billion annual cost savings – and Capex – €1 billion,” said Commerzbank analyst Daniel Schwarz.

“However we believe that such deep cooperation would require cross-holding between BMW and Daimler,” he said.

Hold your horses, says Morgan Stanley’s Adam Jonas.

“We think BMW and Daimler are actually better off as competitors,” Jonas said.


Neil Winton – March 13, 2009

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