Benzinga | Dec 4, 2020 06:58AM EST

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

Tesla Inc (NASDAQ: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 (OTC:DDAIF).

The Right Fit: Thompson said that while Tesla's rivals in the United States such as General Motors Company (NYSE:GM) and Ford Motor Company (NYSE: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 (OTC:BMWYY), due to family ownership, Volkswagen AG (OTC: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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