Daimler Stays Invested In Tesla, But Hedges Its Position Against Loss
Daimler is a big believer in Tesla Motors, and they want to continue to be a major shareholder in the California automaker… but they also want just a little more insurance against the share’s more violent tendencies. Enter the hedge position.
On Friday, Daimler announced the move to better protect itself, as well as this statement explaining the decision:
“The objective of the transaction concluded is to protect the value of Daimler’s shareholding in Tesla, whilst allowing Daimler to retain significant participation in any further appreciation of Tesla share price during the three year collar agreement.”
Currently the German automaker holds 4.3% of the company, good for about $760 million dollars.
The two companies are currently working together on Mercedes’ next plug-in offering, the B-Class Electric Drive which will be out next summer in the United States. Tesla supplies much of the electrical powertrain (as well as the battery packs) for Mercedes.
Daimler has also made its intentions known that it wants to work with Tesla in the future on new projects; a sentiment that was reflected again by the company’s financial chief Bodo Uebber last week during this transaction:
“We are also demonstrating the long-term nature of our partnership and our intention to continue and to broaden the partnership in the coming years.”
Daimler’s position in Tesla was worth more than $1 billion dollars as recently as October of this year.