German carmaker Daimler AG on Tuesday closed a 12-percent investment in BAIC Motor,the passenger car unit of Beijing Automotive Group, at a ceremony in Beijing's Great Hall of the People.
The closing of the deal, the first ever investment by a non-Chinese automotive company in a Chinese original equipment manufacturer, followed an investment agreement signed by the two companies in February and approval by the Chinese authorities, Daimler said in a press release.
The German company's investment will take place through the issuance of new shares corresponding to a 12-percent stake in BAIC Motor. With this, Daimler is proving its strong support for BAIC Motors' intention to launch an initial public offering in the future, according to the carmaker from Stuttgart.
The new agreement between the strategic partners, who started cooperating in 2003, will see BAIC increase its stake in the production joint venture Beijing Benz Automotive Corporation by 1 percent to 51 percent. Daimler will increase its stake in the integrated sales joint venture Beijing Mercedes-Benz Sales Service Corporation by 1 percent to 51 percent, the press release said.
Under the agreement, Hubertus Troska and Bodo Uebber of the Daimler board of management will also receive seats on the BAIC board.
"The strategic investment proves our long-term commitment to both the key China market and our trusted partner BAIC Motor," Daimler Chairman Dieter Zetsche said.
BAIC Chairman Xu Heyi added, "This is another historical milestone in a partnership that has already seen great success in the past, with joint production and sales activities ranging from passenger cars to trucks."
The BAIC Group is one of China's largest automakers. It sold over 1.7 million vehicles in 2012. Recently, it was listed at number 336 in the Fortune Global 500, the overview of the largest corporations in the world.
Daimler AG is one of the world's most renowned and successful car companies. It holds several joint ventures in China. The first to be set up was the Beijing Benz Automotive Company, which has produced passenger cars in Beijing since 2006.