auto daimler
Image Credit: Bloomberg

German automobile giant Daimler said Wednesday it plans to spin off and float its truck division as the maker of Mercedes-Benz pivots to focus squarely on the car business.

Once the separation is complete, the Daimler group will take the name of Mercedes-Benz after its top-selling luxury car.

"Daimler AG's board of management with the consent of the supervisory board today decided to evaluate a spin-off of its truck and bus business and begin preparations for a separate listing of Daimler Truck," the group said in a statement.

Shares in the new truck company will be offered to the group's existing shareholders.

"This is a historic moment for Daimler and the start of a profound reorganisation of the company," said Daimler CEO Ola Kallenius, without however giving a precise date for the firm's name change.

Speculation had been rife in recent months about a listing for Daimler's truck and bus business.

Deutsche Bank analysts in January estimated the spin-off could be worth about 29 billion euros ($35 billion).

The planned listing on the Frankfurt stock exchange will be put to shareholders for approval during an extraordinary meeting likely during the third quarter of the year.

It is expected to be completed by the end of 2021.

Investors welcomed the news, with Daimler shares closing almost nine percent higher to 64.45 euros on Frankfurt's blue-chip DAX index.