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Rumors Swirl of a Daimler-Fiat Truck Deal

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Rumors Swirl of a Daimler-Fiat Truck Deal

By JACK EWING

Published: September 22, 2010

FRANKFURT — The German car and truck maker Daimler, responding to a report in an Italian newspaper, said Wednesday that it was not in talks to acquire the non-car business of Fiat of Italy.

But some analysts speculated that Daimler, based in Stuttgart, might be interested in a partnership with the Italian conglomerate’s Iveco truck division.

Daimler is already the world’s largest maker of heavy trucks, sold under the Mercedes brand as well as Freightliner in the United States and Fuso in Asia. Fiat’s Iveco unit might help Daimler expand in emerging markets like India, where the company’s vehicles are too expensive to sell in large numbers.

An alliance with Iveco would be more likely than an outright acquisition, which would raise antitrust issues in Europe. Sven Kreitmair, a credit analyst at UniCredit in Munich who follows Daimler, noted that the company had often used partnerships as a way of addressing specialized markets. For, example Daimler is cooperating with Renault-Nissan in engines and other components for small cars and light trucks, and the two companies own 3 percent stakes in each other.

“Certainly something like this could make sense” in trucks, Mr. Kreitmair said.

Fiat’s shareholders last week approved a proposal to separate its passenger car business from the rest of the company, which also includes Case New Holland farm and construction vehicles and La Stampa, the daily newspaper in Turin, where Fiat is based.

Analysts said it was very unlikely that Daimler would want to acquire the other Fiat businesses. The Italian newspaper La Repubblica reported that Daimler offered Fiat €9 billion, or about $12 billion, for the assets over the summer. The talks went no further because Fiat wanted €10.5 billion, the newspaper said.

Daimler already has partnerships with companies like Foton Motor in China that it could use to serve emerging markets, said Ferdinand Dudenhöffer, a professor at the University of Duisburg-Essen who follows the car industry,

“Why do they need an Italian partner as well?” Mr. Dudenhöffer said. “The integration costs would be too high. It doesn’t make sense.”

“Iveco needs a partner long term,” he added. “I can’t imagine that Mercedes or Daimler would be the ideal partner.”

A Daimler spokesman, Florian Martens, did not deny that the company may have held talks with Fiat in the past, saying only, “There are no talks with Fiat on this topic.”

In a statement, Fiat said it was continually reviewing opportunities to cooperate with other companies in the industry. One reason to split up Fiat was to allow more flexibility for such opportunities, Fiat said without mentioning Daimler.

Chancellor Angela Merkel’s cabinet approved legislation Wednesday making it more difficult to mount stealth takeovers like Porsche’s acquisition of a major stake in Volkswagen in 2008.

The move, two years in the making, is intended to plug gaps in disclosure rules for stock options, including swaps held by investors building a position in companies. The provision helped Porsche’s bid to build a majority stake in Volkswagen and Schaeffler Group’s attempt to control Continental. Both campaigns ultimately backfired.

Trade groups representing the German finance industry said the government measure would probably benefit investment strategies by increasing transparency and would not necessarily hamper takeovers. At present, disclosure applies only to common shares.

“It’s hard to argue against the basic logic of the legislation,” said Frank Dornseifer, managing director of the BVAI Alternative Investment Federation. Widening disclosure rules “amplifies insight for all market players and not just for executives at companies whose shares are being bought invisibly.”

LINK:

http://www.nytimes.com/2010/09/23/business/global/23daimler.html?_r=1&adxnnl=1&adxnnlx=1285340650-Vzrisryv856X1pXHEe6DlQ

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