No one invests a billion dollars lightly. That's what makes the Persian Gulf emirate of Dubai's recent massive investment in DaimlerChrysler
Dubai's $1 billion investment reportedly will garner it a 2% stake in Daimler, and make it the third-largest investor in the automaker after Deutsche Bank and another state from the Persian Gulf, Kuwait. A spokesman for Dubai's investment company noted that the timing of the move was related to signs that the company is beginning to "bear the fruits of its merger with Chrysler."
Certainly Daimler does have some things to crow about. Its 300 model was a huge success with critics and consumers alike, and it looks like it may have another winner, albeit with possibly a more limited market, with the new Charger. What's more, unlike competitors Ford
But Daimler is not without its faults. Its Mercedes unit still is struggling. The company will also continue to face fierce competition from the likes of Toyota
In the final analysis, the rationale for Dubai's investment is probably not entirely based on Daimler's business prospects. As some analysts have suggested, Dubai may be more interested in attracting Daimler's capital to the United Arab Emirates, the state to which Dubai belongs. While the billion-dollar investment grabbed headlines, the story for investors may not be all that significant.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.