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Daimler sells 4% stake in Tesla for $780 million

Daimler sells 4% stake in Tesla for $780 million

CNBC headline of Mercedes Benz Daimler selling 4% stake in Tesla for $780 million, back to television to look for details...

Benz | 22. Oktober 2014

Forum member "Zzzz..." has posted this message on TMC: "Daimler sold 4.3% position in Tesla for $1.26 billion. $780 million is a “cash inflow”, net after deductions."

michelcolman | 22. Oktober 2014

That can only mean one thing: they're about to release a new EV that actually competes with Tesla! A Model S killer or maybe even a Model ㆔ killer...

Benz | 22. Oktober 2014

@ michelcolman

I don't think so.

Bikezion | 22. Oktober 2014

That's a win win! Daimler helped Tesla at a critical time for Tesla. In return their 50 million investment made them 780 million. Not a bad return. Hopefully they'll use the 780 mil to develop another electric car!

windex | 22. Oktober 2014

I think this is more of leveling the playing field.

It seems like the German marques are the most serious about BEVs.

So, maybe this is a negotiated effort to ease tensions and increase both competition and cooperation.

michelcolman | 22. Oktober 2014

I was of course not being entirely serious. But you never know, it has to happen some day, right?

J.T. | 22. Oktober 2014

My first thought is that Jim Cramer is now streaming to Germany!

Benz | 22. Oktober 2014

@ michelcolman

That's right.

johncrab | 22. Oktober 2014

The three big German luxury companies are locked in a cycle of business war in an effort to differentiate their products. Their cares are basically all alike so they slap on new electronic gizmos to be different. One does it and the rest follow, then the cycle repeats. BMW has released their EV so Mercedes and Audi will follow then the cycle of ratcheting up will begin. I don't see them going head to head with Tesla because they just can't do it. They're going to go after a different market segment, probably with range extender versions to compensate for short range. Only VW seems to be looking long term. That's where we need to look for a Model 3 competitor.

Mathew98 | 22. Oktober 2014

Ah yes, the big 3 douche bags will compete by introducing even more hybrids!

I've never laugh so hard when Lamborghini introduced its next concept vehicle, another hybrid....

Grinnin'.VA | 22. Oktober 2014

@ michelcolman | October 22, 2014

That can only mean one thing: they're about to release a new EV that actually competes with Tesla!

I hope so. I own a bit of TSLA stock, and I was wondering why it hasn't done very well recently. Since I'm in it for the long haul, I'm not bothered. I may buy some more.

Go Tesla!
Ron :)

Mike83 | 22. Oktober 2014

I believe I may have gotten more shares during that last drop when they sold. A nice profit already but I hold at least a year for LTCG and with TSLA maybe forever.

Captain_Zap | 22. Oktober 2014

Blackstar Investco LLC, a part of Daimler's financial arm, owned more than 5% of Tesla at the time of IPO. This level of ownership made Daimler a member of Tesla's Board of Directors.

Daimler North America had a 60% interest in Blackstar and Aabar Blackstar Holdings had a 40% interest in the investment.

Aabar owns over 9% of Daimler. Aabar has a "collar" on Daimler shares to protect itself from market swings. There was some stress in the Aabar/Daimler financial situation due to Daimler's performance in 2012, so Aabar wanted to take their 40% of the Blackstar interest in Tesla shares and have the shares transferred directly to them. Aabar's plan was to dispose of those shares.

When Aabar took the ~3.25 million shares out of Blackstar, this reduced Daimler's Blackstar interest in Tesla and it fell under 5%. The reduction in shares owned by Blackstar resulted in Daimler's seat on the board at Tesla Motors expiring in June 2014.

After the loss of Daimler's seat on the board of Tesla Motors, Daimler decided to put their shares on the market. Daimler had a "collar" on their investment in Tesla Motors and maintaining the collar was expensive. The expense of maintaining the collar appears to have influenced their decision to close their position.

Last Friday there was three large after hours transactions recorded that appeared to add up to the appropriate amount of shares that would represent Daimler's shares.

sbeggs | 22. Oktober 2014

@Captain_Zap,
Thanks for the great and detailed explanation.

johncrab | 22. Oktober 2014

@Captain_Zap. Wow! That's detailed. No wonder I can't make any money from trades, just dividends from slow movers. Now I know why I feel like such an outsider.

Captain_Zap | 22. Oktober 2014

@johncrab

That is why I don't trade. ;-)

When I started looking into Blackstar well over two years ago, I went down a rabbit hole that took me all the way to Arabian Business News' website. I ended up digging through quarterly and yearly reports for Daimler and Aabar.

I like puzzles, but I stick with the big picture.

Mathew98 | 22. Oktober 2014

I'm the awesome trader that is buying Daimler's discarded shares 1 at a time!

Mathew98 | 22. Oktober 2014

2 shares down, 4 million to go...

Mike83 | 22. Oktober 2014

Thanks Captain, great research. The small trader can do well if he is nimble. Long term not near as hard as day trading.