Geely Backs Disclosure of Daimler Deal as German Regulator Looks to Dish Out Fine
Yang Haiyan
DATE:  May 14 2018
/ SOURCE:  Yicai
Geely Backs Disclosure of Daimler Deal as German Regulator Looks to Dish Out Fine Geely Backs Disclosure of Daimler Deal as German Regulator Looks to Dish Out Fine

(Yicai Global) May 14 -- Chinese auto manufacturer Geely Automobile Holdings Ltd., which bought into Mercedes-Benz parent Daimler AG to become its largest shareholder earlier this year, has contested reports that it could be fined for failing to promptly report the acquisition.

Geely informed the market of its 9.69-percent stake in the company on Feb. 23, the earliest possible opportunity, it said in a statement yesterday. The announcement came shortly after reports surfaced online suggesting the company could have to fork over EUR10 million (USD12 million) to the German market regulator BaFin, officially the Federal Financial Supervisory Authority.

The company informed Morgan Stanley, which oversaw the transaction, on Feb. 22 that its board had approved the acquisition, but the actual deal wasn't signed until the next day, the statement added. BaFin did not initially raise an objection and Geely contends the current problem is the result of the regulator choosing to interpret the law in a different way from May 9.

Geely caused a ruckus when it announced it had acquired such a large stake in the company, and Reuters reported on March 2 that Chairman Li Shufu had used a network of shell companies and investment banks to skirt around disclosure regulations that require investors to announce purchases that give them a 3-, 5- and 10-percent stake in a listed company. German regulators have since taken to strengthening oversight of commercial mergers and acquisitions to avoid similar occurrences.

Stock markets were kept up to date with Geely's voting rights in Daimler all along, the firm said. It believes its internal communications with Morgan Stanley were not legal binding and that it did not need to publish a public announcement until penning the deal. Geely was still negotiating the final details from the evening of Feb. 22 through to Feb. 23, it added.

Editor: James Boynton

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Keywords:   Germany,Geely,Daimler,Mercedes,REGULATION