Mercedes 2006 Annual Report Download - page 54

–High Performing, Inspired People: We want to have highly
motivated employees, who actively contribute to the Group’s
success with their outstanding performance; because our
employees’ motivation, creativity and willingness to perform are
the key to the Group’s success. The aforementioned basic
values of Passion, Respect, Integrity and Discipline are the basis
for all our employees’ actions and are essential for the
achievement of top performance.
Portfolio changes. We consistently pursued our strategy
of focusing on the core business once again in the year 2006.
In March 2006, after receiving the approval of the antitrust
authorities, we completed the sale of our off-highway activities
to EQT, a Swedish financial investor, as previously agreed
upon in December 2005. The transaction covers both MTU
Friedrichshafen and the off-highway activities of Detroit
Diesel Corporation (DDC) and had a positive impact on operating
profit of €0.3 billion.
In April 2006, DaimlerChrysler entered into a forward agreement
to hedge a 7.5% interest in the European Aeronautic Defence
and Space Company N.V. (EADS). In January 2007, it was decided
to dispose of the shares on the basis of the contractual
agreement. This resulted in a cash inflow for DaimlerChrysler of
approximately €2 billion.
In February 2007, we reached an agreement with a consortium
of private and public-sector investors by which DaimlerChrysler
will effectively reduce its shareholding in EADS as planned by a
further 7.5% to 15% while maintaining the balance of voting rights
between German and French controlling shareholders. Daimler-
Chrysler has placed its entire 22.5% equity interest in EADS into a
new company, in which the consortium of investors will acquire a
one-third interest through a special-purpose entity. This effectively
represents a 7.5% stake in EADS. DaimlerChrysler will continue
to control the voting rights of the entire 22.5% package of EADS
shares. In return for granting the indirect shareholding in EADS,
DaimlerChrysler will receive approximately €1.5 billion, with a
corresponding effect on its cash flow. The transaction will be
executed in the first quarter of 2007. As compensation for the
indirect ownership of EADS shares, the investors will receive
from DaimlerChrysler a preference dividend on the 7.5% indirect
investment of 175% of the normal EADS dividend. Daimler-
Chrysler has the option of dissolving the newly created company
structure on July 1, 2010 at the earliest. If the structure is
dissolved, DaimlerChrysler has the right either to provide the
investors with EADS shares or to pay cash compensation.
If EADS shares are provided, the German State, the French State
and Lagardère through Sogeade will be entitled to preempt
such EADS shares to retain the balance between the German
and the French side.
The impacts of both transactions on DaimlerChrysler’s net
income will be announced with the disclosure of the results for
the first quarter of 2007.
Various other disposals, such as the sale of real-estate no longer
required for operational purposes, had no impact on our business
portfolio. No significant acquisitions were made in the year 2006.
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