Daimler Spin-off (Truck Business) Notes

Project Description

Daimler Spin-off (Truck Business) Notes

• Daimler announced that it will spin off a majority stake in its heavy truck business. It had previously been rumured that the the business would go public via an IPO but I view a spin-off as more attractive.
• The spin-off is expected to take place before year end.
• The remainco will be renamed Mercedes-Benz.
• The shares would be traded on the Frankfurt exchange.
• “Daimler’s truck unit could be worth about 29 billion euros ($35 billion) if valued at multiples similar to Volvo AB, although it would need to substantially improve returns to justify that valuation, Deutsche Bank analysts wrote in a January report. Sanford C. Bernstein estimated Wednesday that the business could be worth 35 billion euros.”
• Daimler’s current market cap is 69 billion euro.

• This is Daimler’s current valuation.

• As you can see, Daimler trades at a cheap valuation (EV/2020 revenue of 0.34x).
• The benefit of spinning of its Truck division, is Truck companies trade at higher multiples.
• Navistar International (NAV) is trading at an EV/202 revenue multiple of 1.04x.

• Traton (Volvo’s trucking business) IPO’d in 2019 and trades an EV/2020 revenue multiple of 1.04x.

• This is an interesting siituation that I will do more work on.
• Good articles:
  • Daimler is Near Decision to Examine IPO of Truck Unit
  • Daimler to become Mercedes-Benz, Split Trucks Unit From Cars
  • Daimler to Separate its Truck’s Business From Mercedes-Benz
  • The IPO That Could Reorder the Truck Industry
  • A New Road for Mercedes-Benz Offers Hope for Volkswagon Too