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DaimlerChrysler completes McLaren purchase

DAIMLERCHRYSLER has concluded its purchase of 40% of the TAG McLaren Group, the parent company of the McLaren International Formula 1 team. Ron Dennis retains 30% of the shares and the TAG Group keeps its 30% shareholding. We understand that Dennis has negotiated an arrangement by which he controls the TAG votes and so retains ultimate control of the whole organization. It has been agreed by all sides that the financial details of the deal will remain confidential.

According to DaimlerChrysler board member Jurgen Hubbert the deal forms part of a long-term strategy to maintain Mercedes-Benz's leadership in engineering performance, technological edge and brand image in the face of increasingly stiff competition. The move also ties in with DaimlerChrysler's strategy of developing a sport image for the Mercedes-Benz brand, which was begun with the acquisition in 1999 of AMG Motorsport.

There was no word on the long-term plans for the partnership but our sources suggest that there may be future options for DaimlerChrysler to buy the remaining shares in the group and so fully integrate the McLaren brand into the DaimlerChrysler empire. This is unlikely to happen before the launch of the Mercedes-Benz SLR which should go on sale in 2003. This model will put in Mercedes into direct competition with Ferrari in the lucrative supercar market.

Last summer, before the McLaren deal was first suggested, Hubbert did comment that DaimlerChrysler might one day want to "gain control of the technical know-how" at McLaren. The current deal does not give the Germans that.

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