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DaimlerChrysler to Sell Stake in Hyundai

From Reuters newswire:

By Kim Kyoung-wha and Mark Thompson

SEOUL/FRANKFURT (Reuters) - DaimlerChrysler plans to sell a 10.5 percent stake in Hyundai Motor Co worth nearly $1 billion via a block sale, an official at South Korea's top automaker said on Monday.

The official denied a report that Hyundai would buy back the stake from the Stuttgart-based group, but added: "As far as we know, the German carmaker is seeking to sell the stake via a block sale to other buyers."

German newspaper Handelsblatt cited industry sources on Monday as saying DaimlerChrysler would sell to Hyundai.

Sources on DaimlerChrysler's supervisory board told Reuters that it would drop plans to form a commercial vehicles joint venture with the South Korean company and confirmed that Stuttgart wanted to sell its 10.5 percent holding

"There's no sense anymore," a source on the board said, referring to the joint venture.

Chief Financial Officer Manfred Gentz said on Thursday the future of the investment was open.

"We're still negotiating," a DaimlerChrysler spokesman said on Monday.

A sale would be DaimlerChrysler's second major reversal in Asian strategy in as many months after the group cut off financial support to its ailing Japanese partner, Mitsubishi Motors in April, dividing the management board and prompting Chief Executive Juergen Schrempp to offer to resign.

Schrempp survived after he won a statement of support from the supervisory board at a meeting in New York on Thursday.

The rebellion against Schrempp's Mitsubishi bail-out plan produced one casualty: Wolfgang Bernhard, who had been due to take over as Mercedes chief on Monday, was ousted for his vocal opposition to the plan.

Hyundai said last week it was planning to scale back its partnership with the Stuttgart-based group to work on a project-by-project basis rather than in a full alliance.


The two companies have been in talks to produce commercial vehicles and engines in China but the relationship soured.

Hyundai suspended the talks, aimed at forming a joint venture, after Daimler signed a deal with Beijing Automotive Industry Holding Company (BAIC), which Hyundai said violated its own agreement with the Chinese auto maker.

DaimlerChrysler formally signed an agreement with BAIC during a German visit by Chinese premier Wen Jiabao on Monday. The deal will allow it to build up to 25,000 C and E-class Mercedes cars per year at a new works in Beijing.

The group said in a statement that production would begin in the near future but was not more specific about the timetable.

The Hyundai stake is worth more than $940 million and has doubled in value since DaimlerChrysler bought it in September 2000.

Hyundai shares rose 1.56 percent to close at 45,450 won on Monday. Shares in DaimlerChrysler edged 0.6 percent higher, in line with its European peers, after falling 2.5 percent on Friday as the group's decision to stand by Schrempp and his strategy disappointed some investors.

Sunday's edition of the Frankfurter Allgemeine newspaper reported that some members of the supervisory board were still discussing possible replacements for Schrempp and that the chief executive could be replaced within two years.
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