Daimler to spin off truck unit

German carmaker Daimler plans to spin off Daimler Truck, the world’s largest truck and bus maker, as it seeks to increase its investor appeal as a focused electric, luxury car business, sending its shares up nearly 9%.

Daimler’s decision to break itself up follows the example of other German companies, such as Siemens, after investors pressed boards to break up conglomerates.

It also highlights efforts by the Mercedes-Benz luxury car brand to challenge Tesla Inc, Porsche, BMW and others in the market for electric, premium vehicles.

“This pure play luxury car company is even more attractive to investors who seek a return in that area,” Chief Executive Ola Kallenius said during a conference call.

Källenius said he expects the standalone Mercedes-Benz business will be seen as competitive with Tesla, and over time earn a higher valuation from investors.

“It’s about transformation and winning in electric (vehicles) and car software,” he said.

A final decision on the separation will be taken at an extraordinary shareholders’ meeting that could be held at the end of the third quarter and the business could be listed on the Frankfurt stock exchange by the end of 2021, Daimler said.

Analysts said the break-up was logical and the truck business did not add to Daimler’s share price.

“The outcome is extremely positive for all shareholders,” Bernstein analyst Arndt Ellinghorst wrote in a client note, adding there was “very little industrial and cultural logic for combining these two very different businesses”.

Daimler Truck delivered around half a million trucks and buses to customers in 2019 and generated 40.2 billion euros ($48.34 billion) in revenue from trucks and 4.7 billion euros from buses.