Daimler AG Considers Spinning Off Divisions

Daimler AG has investigated the possibility of corporate reorganization since the summer, including spinning off some of its divisions into separate legal entities. The company has now released a statement confirming that they are not pursuing savings or efficiencies in job cuts related to the reorganization, prompting speculation that the company hopes to raise fresh capital by putting separate divisions on the market for investors.

The conglomerate owns Mercedes-Benz, Mercedes AMG, Detroit Diesel, Freightliner, Western Star, and other divisions for commercial buses, trucks, motorcycles, and financing in multiple countries around the world. Daimler AG CEO Dieter Zetsche said in July that the company was considering whether or not to establish one or more of their divisions as a separate company. If they are not looking to cut costs, like a similar move at Ford to cut overhead and save money, then it is more likely they want to raise additional money for autonomous and electric cars. Daimler would then follow in the footsteps of automakers like Volkswagen and Fiat Chrysler, both of which have considered putting lucrative divisions on the market to raise funds for pricey new technologies.

Breaking up the conglomerate’s divisions could make it easier for outside investors to value them and create a higher figure than the combined whole, unlocking more funds and creating a more responsive and nimble business entity. While it might not be the most compelling news this morning, stay tuned to see if Daimler is going to bet the farm to raise the required cash for autonomous and electric cars.