(Bloomberg) — Daimler AG’s sprawling trucks division will start trading on Friday in Frankfurt, finalizing a spinoff designed to boost the valuations of the world’s biggest manufacturers of commercial vehicles and luxury cars.
Daimler Truck AG and Mercedes-Benz expect their split will enable the two to move more quickly toward an electrified and autonomous future. Their breakup ends more than a century of the businesses running under one roof.
Investors expect the listing of Daimler Truck will lead to more transparency and accelerate its restructuring in Europe, where high costs are squeezing returns. Jefferies analysts led by Himanshu Agarwal estimate the company’s equity could be valued at as much as 44 billion euros ($50 billion) based on peer multiples.
“Given Daimler Truck’s profitability ambitions, we believe it should trade closer to Volvo AB” than Volkswagen AG’s Traton SE, Agarwal said in a report released Monday. The manufacturer’s initial exclusion from Germany’s benchmark DAX index may cause shares to fall at the start of trading, he said.
The truck spinoff is the most significant strategic step for Daimler since selling Chrysler in 2007 and a key element of Chief Executive Officer Ola Kallenius’s push to transform the storied manufacturer into a nimbler company. Daimler’s earnings and stock price started to languish late in the 13-year reign of his predecessor Dieter Zetsche, forcing Kallenius into making bold changes as fundamental shifts sweep the industry.
While Mercedes’s push toward battery cars is in full swing, technologies like hydrogen fuel cells are set to play a bigger role for trucks and the logistics sector. Daimler has said that both units remain open for cooperation.
Struggling Rivals
Daimler Truck unveiled a battery-powered version of its Actros model in June, aiming to beat Tesla Inc. when it comes to electrifying big rigs as the U.S. company struggles to get its Semi project off the ground.
Daimler’s German rival Traton recently replaced its two top executives, the second such shakeup at the business since its underwhelming initial public offering in 2019. The stock has failed to take off in part because of a small free float, with parent Volkswagen AG still holding about 90% of shares.
Mercedes will retain a 35% stake in its truck firm and hopes for the business to enter the DAX in the first quarter of next year.
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