Sunday, October 02, 2005

DaimlerChrysler Rules Out Stake in Volkswagen

Text from Reuters.
FRANKFURT, Oct 1 (Reuters) - DaimlerChrysler, the world's fifth-biggest carmaker, on Saturday ruled out taking a stake in German rival Volkswagen, six days after Porsche said it wanted to buy a fifth of VW.

"We will not take a stake in Volkswagen, even in the future," a company spokesman said, dashing speculation that the rivals would form a financial link.

But the head of Daimler's Mercedes unit, Dieter Zetsche, told the Stuttgarter Zeitung in an interview on Saturday that Daimler would continue to hold talks with VW about intensifying cooperation between the two carmakers on a number of projects.

German media had reported that Daimler and VW had discussed a cross-shareholding to protect each other from a hostile takeover.

Weekly magazine Der Spiegel wrote that the two sides agreed each would take less than 20 percent in the other's shares, although they would not appoint their own representatives to each other's supervisory boards to avoid a conflict of interest.

German daily Frankfurter Allgemeine Zeitung reported on Saturday that VW would swap 10 percent of its shares for 6.9 percent of Daimler shares held by Deutsche Bank.

On Sunday, Stuttgart-based luxury carmaker Porsche said it would acquire a stake of 20 percent in VW, making it the company's largest shareholder. The state of Lower Saxony has 18.2 percent.

Zetsche told the Stuttgarter Zeitung that Daimler was holding talks with VW about a number of projects, such as a minivan and whether to put Volkswagen engines into Chrysler cars.

"We are seeing whether there are more possibilities to intensify our cooperation," Zetsche said. "We're talking about a whole bunch of projects. We meet each other regularly."

Die Welt reported on Saturday that VW and Daimler were holding discussions about the possibility of building the successor to Daimler's Smart ForFour car at Volkswagen.

Both companies declined to comment on the report.

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