Daimler-Benz Plans to Buy High-Tech Firm
Daimler-Benz, the West German auto manufacturer, said Monday that it plans to buy a controlling interest in AEG, the electrical firm. If the deal is completed, it will make Daimler the largest corporation in West Germany.
The announcement was made by officials of the two firms at a news conference in Stuttgart, where the Mercedes-Benz auto plant is situated. They described the Daimler move as a friendly takeover bid.
The acquisition must be approved by the West German Federal Cartel Office, which has jurisdiction to review all acquisitions of 25% or more of a company. It has raised no objections so far.
Daimler has already acquired about a quarter of the shares in AEG, which produces a variety of high-technology electrical equipment. It said it plans to offer 170 marks (about $64) a share for additional shares that would raise its AEG holdings to more than 50%. Neither the exact stake nor the total price was specified.
Last year’s combined sales of Daimler-Benz and AEG were about 60 billion marks (about $22.6 billion), which would put the merged company well ahead of the two that currently are West Germany’s largest: the Siemens electrical group and Volkswagen, each of which had sales of about 45 billion marks (roughly $17 billion).
Daimler-Benz has no lack of cash. Last year, it rang up its biggest profit ever with a net of 1.1 billion marks (about $415 million), one-third of which came from luxury car sales in the United States.
AEG, on the other hand, has recovered from the brink of bankruptcy in 1982, when it had a disastrous year because of the recession.
A consortium of West German financial institutions, led by Dresdner Bank, acquired about half of the electrical company’s shares, and, according to sources here, the bankers are prepared to sell to Daimler-Benz. The cost of those holdings in AEG, financial sources say, would be about 1.6 billion marks ($600 million).
At the news conference Monday, the Daimler board chairman, Werner Breitschwerdt, described the acquisition of AEG as a “significant step moving Daimler-Benz along the road toward being a high-technology group.”
AEG’s operations include communications, electrical and office machinery, industrial equipment and household appliances.
U.S. auto makers have also diversified into high-technology companies. In the last two years, General Motors has acquired Electronic Data Systems, a Dallas-based computer-services company; stakes in six other high-technology companies, and Hughes Aircraft.
Since 1983, Ford Motor has acquired significant stakes in a long-distance telephone company and a maker of computer-integrated manufacturing systems.
Chrysler bought Savannah, Ga.-based Gulf Aerospace last month.
In addition to passenger cars, Daimler makes Mercedes trucks. This year it has taken over Motoren und Turbinen Union, an engine maker, and Dornier, an aerospace firm.
