Ion Tiriac exits Mercedes-Benz business

Businessman Ion Tiriac, who controls the Tiriac Holdings group, has struck a deal with German Daimler AG group to sell his 49% stake in Mercedes-Benz Romania, a business of almost 400 million euros in 2008, market sources say.

The representatives of Mercedes-Benz Romania, the official importer of the Mercedes-Benz, smart, Jeep, Chrysler, Dodge and Mitsubishi Fuso brands, did not provide any comment. Officials of Tiriac Holdings, which groups all Ion Tiriac’s businesses together, did not provide any comment, either.

Ion Tiriac built his automotive empire in Romania, which was worth 800 million euros in 2008 and comprises importers of Ford, Hyundai, Jaguar, Land Rover and the 40 dealers part of the TiriacAuto, starting with Mercedes Benz, a brand he brought in Romania through Autorom company in 1990. In his first year in business, the company sold 17 cars and spare parts worth approximately 1,000 dollars. In 1991 it sold 60 cars and 30,000 dollar worth of spare parts. The year 2008 was the peak for the Mercedes business in Romania, with over 8,800 cars sold.

The exit of Tiriac from the Mercedes-Benz business would be the first major transaction on the domestic automotive market since the onset of the crisis.

The auto market is among the worst hit industries in Romania after declines of more than 50% every month this year. The sales of the Mercedes-Benz importer have not been immune, either, with the company posting a 58% decline for the first ten months of the year to 3,300 units. Based on these figures, the turnover of the importer might stand at only 60% of last year’s 240 million euros.

According to the data on the Finance Ministry’s website, Mercedes-Benz Romania ended 2008 with more than 9 million euros in losses compared with a 13 million-euro net profit in the previous year.

Consultants on the M&A market say that multiples used in the valuation of auto industry companies have seen the harshest corrections this year, as a result of the decline of the market and limited financing options. As a result, the value of Porsche Romania, whose business stood at one billion euros and net profit reached 70 million euros in 2008, fell by 44% this year to 241 million euros, according to the “100 Most Valuable Companies in Romania” Yearbook compiled by ZF in partnership with Capital Partners investment firm. According to ZF’s estimates, Mercedes-Benz Romania might be worth 50 to 80 million euros.