Kuwait Wealth Fund Sells €1.4 Billion of Mercedes Shares

(Bloomberg) — The Kuwait Investment Authority sold shares worth about €1.4 billion in Mercedes-Benz Group AG — roughly a quarter of its stake — after the carmaker’s stock almost quadrupled over the last three years.

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The KIA will own around 53 million shares after the share placement of about 20 million shares, which is part of an effort to diversify its portfolio, according to a statement.

The stake sale, which represents about 1.9% of Mercedes-Benz Group’s entire share capital, was priced at €69.27, according to the terms seen by Bloomberg. The price is a 3.6% discount to the stock’s Tuesday close.

Mercedes shares dropped 2.4% on Wednesday following the news, after having surged about 50% from its July low through the start of March and having more than quadrupled since their 2020 pandemic low. The KIA had informed the company of its decision and it plans to remain a key shareholder in the automaker, the German company said in a separate statement.

Chief Executive Officer Ola Källenius has focused the automaker on more profitable segments and pared back its offerings of entry-level models, leading to a 43% surge in the average price of a Mercedes since 2019. He also split the luxury-car company from its commercial vehicle operation, spinning off Daimler Truck Holding AG in late 2021.

While the luxury strategy has boosted earnings, Mercedes has been forced to cut the price of electric flagship models in China while the European and the U.S. economies are weakening.

Kuwait currently owns 6.8% of Mercedes, making it the third-biggest holder, according to data compiled by Bloomberg. The KIA — the world’s oldest and one of the largest wealth funds — has been a Mercedes shareholder for almost 50 years.

–With assistance from Ksenia Galouchko.

(Updates with sale details throughout)