Did Elon Musk just want to be polite or did he just signal a change of strategy? Observers asked themselves this question after the CEO, when accepting a prize this week in Berlin, said that if a traditional car manufacturer wanted to be taken over by Tesla, “we would certainly talk about it”. At least he had not ruled out such a transaction. Against this background, a financial service has been looking into the question of which conventional competitor would be interesting for Tesla – and suggests the German Daimler group as a target.
Wanted is a weak electric car strategy
Under the heading Breakingviews, the Reuters agency has been offering a service for some years now in which it publishes opinion articles and analyses on stock market topics beyond the classic news business – similar to banks, but independent and pointed. “Daimler could be the Ti-me Warner for Elon Musk,” is the headline of an article from that Thursday. Just as the online service AOL once did with its much larger competitor Time Warner, Tesla could use its highly rated stock to merge with an established provider, it explains.
And as the most suitable partner in this respect, the financial services department identifies the German automotive group Daimler with its Mercedes-Benz car brand: Only one luxury brand would fit the ambitious Tesla customers, which is why Ford and General Motors have already left the company. In addition, Tesla CEO Musk said that a merger would create the most new value by taking over a manufacturer with “low voltage in its electric car strategy.
Of course, BMW is the first German company to come to mind with its longstanding commitment to mixed platforms (for electric cars, hybrids and pure combustion engines) – but according to breaking views, family ownership would probably make a takeover impossible. Volkswagen, on the other hand, is already focusing on electric cars itself, large Japanese companies are generally notoriously difficult to buy, and a supercar manufacturer like Lamborghini, which VW probably wants to sell, is too much of a niche supplier.
Financially, the takeover would not be a problem
This leaves as a possible Tesla target Daimler, currently valued at 73 billion dollars, and the manufacturer with the most luxury sales worldwide, whose stock has underperformed in the past five years. A takeover would dilute Tesla’s pure electric car image and would have to deal with German governance structures, writes Breakingviews. But Daimler could quadruple Tesla’s global production, and the company’s good position in Europe and China would also strengthen Misk’s electric offensive.
For a while, Daimler even had a reverse shareholding in Tesla, but then sold its shares at a high profit, but many billions below the value that has since been achieved. At 560 billion dollars, its capitalization is so much higher than that of Daimler that Tesla could take over the company without the approval of its shareholders – up to a purchase price of at least 100 billion dollars, according to breaking views. So Musk could (always theoretically) offer a premium of a whopping 40 percent per Daimler share without even asking for permission.