The much-ballyhooed partnership between Daimler AG (OTCMKTS:DDAIF) (ETR:DAI) (FRA:DAI) and Rolls-Royce Holding PLC (ADR) (OTCMKTS:RYCEY) (LON:RR) only ended up lasting a few years. Daimler announced today that it is selling its 50% stake in an engines joint venture to partner Rolls-Royce Holdings Plc. The luxury auto manufacturing giant is looking to invest the proceeds in its expanding automotive and truck businesses.

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The statement released by the companies earlier today noted the exact terms of the deal will be determined at a future date. However, Rolls-Royce Holding PLC (ADR) (OTCMKTS:RYCEY) (LON:RR) placed a value of 1.9 billion pounds ($3.2 billion) for the venture on the firm’s balance sheet as of Dec. 31, 2013.

2011 partnership deal

Daimler AG (OTCMKTS:DDAIF) (ETR:DAI) (FRA:DAI) and Rolls-Royce Holding PLC (ADR) (OTCMKTS:RYCEY) (LON:RR) became partners in a 3.4 billion-euro ($4.72 billion) bid for a German engine manufacturer in late 2011. The consolidated enterprise produces high-speed diesel engines for the marine, energy and defense industries. Rolls-Royce also contributed its Bergen engine business as part of its equity in the venture. A number of analysts at the time questioned just how long this partnership would last, especially given the existence of a “put option” for Rolls-Royce to buyout Daimler’s stake.

According a previously agreed contract, Daimler AG (OTCMKTS:DDAIF) (ETR:DAI) (FRA:DAI) will still provide medium- and heavy-duty diesel engines to the venture until 2025. Daimler currently delivers about 18,000 engines annually per the agreement.

Analyst comments

Bloomberg reached out to a European auto industry analyst for further analysis of today’s news. “Daimler needs to invest in new technologies in the auto segments,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler, commenting on the divestment news. “They need the money there more urgently than for a more peripheral business.”

Daimler trying to become No. 1 luxury automaker

Daimler AG (OTCMKTS:DDAIF) (ETR:DAI) (FRA:DAI) CEO Dieter Zetsche has publicly stated he plans for Mercedes to overtake Audi AG (ETR:NSU) (FRA:NSU) (OTCMKTS:AUDVF) and Bayerische Motoren Werke AG (ETR:BMW) (FRA:BMW) to become the world’s largest luxury car maker by 2020. He has the company ambitiously on track to roll out 30 new vehicles over the next six years, close to a dozen of which will have been designed from scratch.