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Daimler to sell 10.5% stake in Hyundai Motor

Hyundai Motor confirmed today that DaimlerChrysler would sell its entire 10.5% stake in South Korea's biggest carmaker.

The announcement, made in response to wide speculation that DaimlerChrysler would sever its ties with Hyundai after their relationship soured in recent months, marked the failure of another part of DaimlerChrysler's Asian strategy. The US-German giant decided last month to abandon a bail-out scheme for Mitsubishi Motors (MMC), its Japanese affiliate.

The stake, which DaimlerChrysler bought nearly four years ago for about $400m (£226m) as part of the company's efforts to build a presence in Asia, is valued at $1bn (£566m) at current market prices.

Under today's agreement, Hyundai will acquire DaimlerChrysler's 50% stake in Daimler Hyundai Truck Corp, an existing commercial-vehicle engine joint venture in South Korea.

The companies will also scrap their long-delayed truck and truck-engine joint venture. Those delays coupled with tensions surrounding the two companies' competing operations in China - were among the main reasons behind the worsening relationship.

But Hyundai and DaimlerChrysler will continue joint production of vehicle engines together with MMC. DaimlerChrysler will also distribute Hyundai's Atos and Verna (Accent) cars into the Mexican market through its local affiliates.

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