By Christoph Steitz

FRANKFURT (Reuters) -Daimler will keep a 35% stake in the trucks division it plans to spin off this year, the luxury carmaker said on Friday, giving more details on a landmark corporate split it hopes will boost share values.

The spinoff of Daimler Truck Holding AG as a separate listed entity, first announced in February, will be voted on by Daimler shareholders at an extraordinary general meeting on Oct. 1.

They will receive one share in the trucks division for every two Daimler shares they own.

Daimler, in turn, will be renamed Mercedes-Benz Group AG to reflect its focus on the car and van business, including the Mercedes-Benz brand, and efforts to challenge Tesla and other rivals in the market for electric premium cars.

“Daimler’s realignment makes one success story into two,” Daimler Chief Executive Ola Kaellenius said.

“With this courageous step into a new future, we are creating added value with two pure-play companies for our customers, employees, shareholders and partners.”

Daimler will provide Daimler Truck Holding AG with net liquidity of 5 billion euros ($5.9 billion) until the end of the year, when the truckmaker’s shares are expected to start trading, so that it can achieve an investment-grade rating.

Spin-offs, under which existing shareholders get shares in the new vehicle for free, have been a prominent way for large corporations to unlock value and respond to investors demanding a sharper business model.

Daimler shares are up about 17% since the spin-off announcement, in line with the broader European automotive sector.

“Up until now, we had to travel in a convoy. In the future, we will be able to plan our own route and choose the best route for us,” said Martin Daum, designated chief executive of Daimler Truck Holding AG.

Of the 35% Daimler plans to retain in the division, which is the world’s largest truck and bus maker and will be a contender for Germany’s blue-chip DAX index, 5% will be transferred to the carmaker’s pension fund.

As of Jan. 1 2021, Daimler Truck Holding AG shareholders’ equity on a pro-forma basis stood at about 11.1 billion euros, equivalent to an equity ratio of 22%, Daimler said.

($1 = 0.8418 euros)

(Reporting by Christoph Steitz; Editing by Douglas Busvine and Keith Weir)

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