Daimler (DAI.DE) shareholders have voted to split the company’s truck-making division from its Mercedes-Benz luxury car operations.
The historic realigning of the business will see it retain a 35% stake in the truck firm, with hopes for the new truck company to enter the DAX, Germany’s benchmark stock index. It added that 5% will be transferred to the carmaker's pension fund.
The planned spin-off of Daimler Truck, which was first announced in February, is set to happen by the end of this year.
It will create the world’s largest standalone commercial vehicle manufacturer, and one of the biggest public floats in Germany this year.
Read more: Tech and pharma lead global IPO boom
The move will allow the separate companies to focus on their core markets and different emissions-free technologies in a bid to challenge the likes of Tesla (TSLA) and others in the market for electric premium cars.
The majority of Daimler Trucks’ revenues come from the US and Europe, while China is by far Mercedes’ largest and most profitable market.
Shareholders will now need to approve the renaming of Daimler to Mercedes-Benz Group, effective from 1 February next year.
It was confirmed at the extraordinary general meeting on Friday that shareholders will receive one share in the trucks division for every two Daimler shares they own.
"Daimler is splitting into two strong and independent companies. With this decisive realignment into pure-play entities, we aim to create value for all stakeholders,” Ola Källenius, Daimler chairman, said.
“Now is the right time to take this step: self-determined and from a position of strength. By unlocking the full potential of both companies, we are establishing two undisputed innovation leaders who will set the pace in the transformation of their industries.”
The flotation of Daimler’s truck division follows Volkswagen’s decision to spin-off its lorry business, Traton, in 2019 before the pandemic.
Daimler shares are up almost 20% since the spin-off announcement, in line with the broader European automotive sector. They rose 0.9% in Germany on Friday.
Watch: What are SPACs?