Dubai Buys $1-Billion DaimlerChrysler Stake

DUBAI —  The government of the Persian Gulf emirate of Dubai has bought a $1-billion stake in DaimlerChrysler, becoming the automaker’s third-largest shareholder, it said Sunday.

The purchase was made through Dubai Holding, which was set up last year to oversee the emirate’s ambitious multibillion-dollar domestic and foreign investment schemes.

“We welcome Dubai as a long-term investor, which shows it believes in DaimlerChrysler’s potential,” a company spokesman said, confirming the deal.

Industry sources said that neither Deutsche Bank nor the gulf state of Kuwait -- DaimlerChrysler’s biggest and second-largest shareholders -- had reduced their stakes. Dubai’s stake was about 2%, the sources said.

“This is a perfect time to acquire shares in DaimlerChrysler as the company begins to bear the fruits of its merger with Chrysler,” said Mohammed Al Gergawi, chief executive of Dubai Holding.

Dubai is one of the emirates in the oil-rich gulf state of the United Arab Emirates. The emirate is striving to create a diversified, non-oil economy to make up for falling revenue from dwindling crude reserves.

Walid Shihabi, an analyst at Dubai-based investment bank Shuaa Capital, told Reuters that the deal might lead to DaimlerChrysler investing in a Dubai-based manufacturing facility.