Tesla Is Open To A Merger — And Daimler Would Be The Right Fit: Reuters

Tesla Inc TSLA may have a meager 0.8% global market share but, with its $540 billion valuation, it could acquire a legacy automaker, which Reuters’ Christopher Thompson opines should be Germany’s Daimler AG DDAIF.

The Right Fit: Thompson said that while Tesla’s rivals in the United States such as General Motors Company GM and Ford Motor Company F “hardly” fit the criterion for acquisition, but the $74 billion Daimler fits the bill because Tesla customers are aspirational and may be amenable to a luxury marquee.

Other Candidates that were ruled out by the Reuters’ writer include Bayerische Motoren Werke AG BMWYY, due to family ownership, Volkswagen AG VWAGY due to its own electric ambitions, and Japanese companies, due to historical acquisition difficulties.

Why Daimler: Daimler has the potential to boost the Elon Musk-led company’s worldwide car output by nearly four times. The Stuttgart-based automaker's presence in China and Europe, the two biggest battery-vehicle markets would “reinforce Musk’s electric offensive,” wrote Thompson. He also pointed to the fact that Daimler held a small stake in Tesla in the past.

Cherry On The Cake: Under existing U.S. stock-exchange rules, Tesla would require shareholder approval if it sought to increase its outstanding shares by more than 20%. This means, given the company’s valuation it could, in theory, purchase a company worth $100 billion or more. Thompson said that Musk could purchase the “Benz empire” without even asking for permission. 

No Hostile Takeovers Please: On Tuesday, Musk had said in an interview with Axel Springer CEO Mathias Doepfner that Tesla was “definitely not going to launch a hostile takeover.” He, however, said the electric vehicle maker was open to voluntary and friendly mergers. If a company says “hey, we think it would be a good idea to merge with Tesla,’ we’d certainly have that conversation,” Musk told Doepfner.

Price Action: Tesla shares closed nearly 4.3% higher at $593.38 on Thursday. On the same day, Daimler OTC shares closed 1.4% lower at $68.56.

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