Life & Style | Motoring
Daimler plans 10% share buyback
Daimler AG, the world's second- largest maker of luxury cars, plans to buy back as much as 10 per cent of its shares in the company's latest effort to boost the stock after ending a nine-year entanglement with Chrysler.
- Bloomberg
- Published: 23:53 June 17, 2008
Berlin: Daimler AG, the world's second- largest maker of luxury cars, plans to buy back as much as 10 per cent of its shares in the company's latest effort to boost the stock after ending a nine-year entanglement with Chrysler.
Daimler rose the most in more than four months in Frankfurt trading after the Stuttgart, Germany-based company said it will spend as much as six billion euros (Dh34.2 billion) to buy as many as 96.4 million shares by April 8, 2009.
Under pressure to boost investor returns, Daimler had bought back shares valued at 6.2 billion euros between August and March.
Daimler got approval for a further buyback in April, but didn't act until yesterday, contributing to a 31 per cent drop in the stock this year.
Chrysler connection
The German company's connection with Chrysler has continued to hurt earnings after the sale of most of the Auburn Hills, Michigan-based automaker.
"That is finally what the market was looking for," Georg Stuerzer, a Munich-based analyst with Unicredit, said in an interview. "The move is a signal that the ongoing business is running well."
Daimler gained as much as 2.26 euros, or 5.2 per cent, to 45.94 euros in Frankfurt, the sharpest advance since February 12. The stock was up five per cent at 12:53pm, valuing the company at 44 billion euros.
"It's a clear signal that management is looking optimistically into the future," said Arndt Elling-horst, head of automotive research at Credit Suisse in London, who has an "outperform" recommendation on the stock. "This is further confirmation of their strategy to give cash back to investors."
Daimler said on June 4 that earnings this year will rise as car and truck sales increase. Earnings before interest and taxes will be "well above the prior-year level", excluding the effects of selling the Chrysler unit last year, Daimler said.
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