This Chinese Automaker Just Became Mercedes-Benz's Biggest Investor

As part of the investment, a BAIC production facility located in the capital city's Shunyi district will be transferred to BBAC, and modified to facilitate complementary production capacities for Mercedes-Benz cars. Given Geely's strong credit, it might only need to pay 25 percent initially, or US$2.25 billion, for the Daimler stake.

In a statement released on Monday, AB Volvo said the reason Samuelsson won't stand for reelection to its board is because Daimler is "one of the Volvo Group's major competitors".

The 9.7% holding makes Li Daimler's biggest shareholder and puts the owner of Mercedes-Benz in a pickle as the latter already has a partnership with China's BAIC Motor Corporation to build cars in China.

Meanwhile, the technology and brand image of Volvo also gave a boost to Geely's own brand business.

Meanwhile, Chinese investors in German technology companies, such as Midea, which bought Kuka, one of the world's largest makers of industrial robots, or Weicha which bought a large stake in Kion, have tended to engage in lengthy consultation with German stakeholders. In addition, Li Shufu has been hoping to get access to the development of Daimler in the field of creating environmentally friendly vehicle for use in China. Volvo's Swedish executives note that Geely has given them enormous leeway to run the company as the seen fit.

German energy group Innogy, majority-owned by RWE, on Friday denied a media report saying that its supervisory board would discuss a possible sale to rivals Iberdrola or Enel at its next meeting in March. Germany's DIHK chambers of industry and commerce representing 3.6 million companies in Europe's largest economy welcomed Geely's actions.

Electric vehicles is the new battle ground in China, where the government is actively pushing for the eradication of fossil-fuel powered automobiles by giving new incentives. Geely acquired Volvo from Ford in 2010 and has pumped considerable money into that company's passenger cars and crossovers. After the story ran, other Chinese automakers, including Great Wall, also expressed interest in some or all of FCA's assets.

BAIC Group chairman Xu Heyi said: "With over a decade of remarkable achievements, BBAC stands as evidence of the strong collaboration between BAIC and Daimler".

Geely worked with Bank of America Merrill Lynch, which declined to comment, to help secure a 9.69% voting stake using derivatives to help skirt disclosure requirements, two people familiar with the deal told Reuters.

The Mercedes-Benz maker is splashing cash in an effort to claim a solid lead in China's growing luxury vehicle market.