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What Triggered Daimler's (DDAIF) Truck Division Spin-Off Decision?

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Daimler AG DDAIF is on track for a historic restructuring of the company with the planned spin-off of its truck arm being approved by its shareholders on an online shareholder meeting. The approval will see Daimler float its truck division on the Frankfurt stock exchange by the end of 2021. The voting also secured shareholders' green signal for renaming Stuttgart-based Daimler as Mercedes-Benz Group AG effective Feb 1, 2022.

The renaming of Daimler to Mercedes-Benz Group AG highlights the company’s decision to kindle its long-term focus on the car and van business with the brands Mercedes-Benz, Mercedes-AMG, Mercedes-Maybach and Mercedes-EQ.

Post Daimler’s split, shareholders will hold a 65% stake in the new Daimler Truck Holding AG, which will be listed on the stock exchange as an independent company. The existing Daimler shareholders will receive one Daimler Truck share for every two Daimler shares they own. This means shareholders will hold shares of the global market leader in the commercial vehicle business, along with their shares in Daimler. Once the spin-off is completed, the car-making division will retain a 35% stake in Daimler Truck, but will transfer a 5% holding to the Daimler pension trust.

This historic move will witness Daimler splitting into two strong and independent companies with specific customer groups, technology paths and capital needs. With this realignment into pure-play entities, the company aspires to create value for all stakeholders, bolster its profitability and fully exploit its true potential. The spin-off will witness the establishment of two unprecedented leaders, who will operate most effectively independently to master the transformation of their respective industries.

Mercedes-Benz is one of the world’s most valuable luxury car brand, offering the most desirable cars to customers. The spin-off will increase Daimler's appeal as an electric, luxury car business, as the Mercedes-Benz marquee continues to compete with big names like Tesla TSLA, Porsche, BMW AG BAMXF among others.

Daimler Truck provides industry-leading transportation solutions and services to customers. In the truck sector, Daimler faces rivals, such as Volkswagen’s Traton and Paccar Inc PCAR. With the split, Daimler Truck aims to boost its profitability and move ahead with its development of emission-free technologies for trucks and buses.

This is a pivotal moment for Daimler Truck. With this independence, the truck company plans to grow further and continue its dominance in alternative powertrains and automation. Also, with the split, the company will be able to garner greater opportunity, visibility and transparency. The company anticipates building new partnerships to accelerate the development of key technologies, in a bid to deliver the best-in-class products to its expanding customer base.

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