Questions & Answers regarding the Share Buyback Program
Between the end of August 2007 and the end of March 2008, Daimler executed a share buyback program under which, based on the authorization granted by the Annual Meeting on April 4, 2007, a total of 99.8 million shares were bought back for an amount of €6.2 billion.
Following that buyback, Daimler continued to dispose of a high degree of (net) liquidity in its industrial business. By June 30, 2008, the net liquidity of the industrial business amounted to €8.8 billion.
Parallel to the development of liquidity, the equity ratio of the industrial business has continued to rise. Following a ratio of 43.5% at the end of 2007, it reached 47.6% as of June 30, 2008. Daimler therefore has to further optimize its capital structure.
In order to secure the Group’s profitable growth in the medium and long term, reducing the cost of capital has top priority. To achieve this goal, net liquidity and accordingly the equity ratio of the industrial business must be further reduced.
Total budget:
A maximum of € 6.0 billion.
Sequences of the program based on the authorization of the Annual Meeting 2008:
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Start: |
June 18, 2008 |
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Finalization: |
April 08, 2009 |
Implementation:
The share buyback program will be managed by a bank, which will make its decision on the times of purchase independently and without being influenced by Daimler.
In accordance with the authorization granted by the Annual Meeting, the price paid by Daimler AG for each share (excluding transaction costs) purchased through the stock exchange may not be more than 5% higher or lower than the price determined at the opening of Xetra trading at the Frankfurt am Main Stock Exchange.
With the possible use of derivatives, according to the resolution of the Annual Meeting, the price paid by the company for options may not be substantially higher and the sale price received by the company may not be substantially lower than the theoretical market value of the options calculated using recognized financial mathematical methods, whereby the agreed exercise price is one of the factors to be taken into consideration. The derivatives used (stock options) may not be applied for the acquisition of more than 5% of the share capital as of April 9, 2008.
The exercise price of the options (excluding transaction costs, but taking into consideration the option bonus received or paid) may not be more than 10% higher or lower than the average closing price in Xetra trading at the Frankfurt am Main Stock Exchange on the last three days of trading before the conclusion of the respective option transaction.
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Start: |
August 30, 2007 |
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Interruption: |
December 12, 2007 |
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Continuation: |
February 14, 2008 |
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Finalization: |
March 28, 2008 |
A participation in the share buyback is not possible. Also, individual offers to the company are excluded, because the share buyback program will be managed by a bank. Each shareholder who wishes to sell his/her shares, can do so by involving his/her bank or custodian like with every other sale of shares.
We need to preclude the abuse of insider information on the part of the company. Therefore, the share buyback program will be managed by a bank, which will make the buying decisions independently of any instructions from the company.
The benefits of a share buyback program versus a special dividend are as follows:
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Taxation: Most shareholders have to pay taxes on special dividends. In the case of a share buyback program, German private shareholders will only be taxed if they sell their shares at a profit during the so-called speculative period.
In case Daimler would distribute a special dividend, the share price after the payout would be reduced in the magnitude of the ex dividend discount. The wealth of the shareholder would not increase. However, as a general rule, the special dividend you be subject to taxation, which would lead to a decrease of the wealth of the . -
Flexibility of timing: After the approval of the buyback, the company can repurchase shares, whereby the buyback and its volumes can be organized flexibly within the timeframe. The share buyback program can also be adjourned or stopped at any time if there is good reason to do so.
Yes, the company reports on the development of the share buyback here.
After the termination of the program, corresponding information and a report to the Annual Meeting are required. Furthermore, formal notification of participating interest in the company will have to be made if any disclosure thresholds are exceeded.
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