Please ensure Javascript is enabled for purposes of website accessibility

Daimler Plans to Unlock Value with Truck Spin-Off

By Daniel Miller - Feb 3, 2021 at 1:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Daimler could split into two companies, to the benefit of investors.

Daimler (DMLR.Y 0.00%), known for its Mercedes-Benz brand, but also a producer of Smart cars, commercial trucks, vans, and buses, announced Wednesday that it would evaluate a large fundamental change in its business structure.

Daimler's plan calls for a separation of the automaker into two pure-play companies, with the majority listing Daimler Truck to focus on zero-emissions technology and software business. Management will begin preparing for a listing of Daimler Truck with the intentions that a significant majority stake in Daimler Truck will be granted to Daimler shareholders. The goal is for the transaction and the listing of Daimler Truck (on the Frankfurt stock exchange) to be completed before the end of 2021. And once the spinoff is complete, Daimler aims to rename itself Mercedes-Benz.

Mercedes-Benz truck on highway

Image source: Daimler.

This is a move and strategy that automotive investors could become accustomed to as automakers evolve in an industry accelerating from traditional vehicles to electric fleets, autonomous vehicles, big data, and software-driven technology.

For Daimler specifically, this could unlock more value for shareholders with two more-focused companies: Mercedes-Benz will remain a highly valuable luxury car brand while Daimler Truck will try to lead in transportation solutions and services. The companies will have very different capital needs and will face different challenges, but can now operate more effectively as separate businesses.

Although the deal seems all but completed, and would be a positive development for the company since independent management could enable both companies to thrive, investors would be wise to keep up to date on developments closer to year-end. "A spinoff would require the approval of an extraordinary shareholders' meeting of Daimler AG, which could be held at the end of Q3 2021," according to a Daimler press release.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Daimler AG Stock Quote
Daimler AG
DMLR.Y
$16.78 (0.00%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.