FRANKFURT -- Deutsche Bank sold more than a third of its shares in DaimlerChrysler on Tuesday for more than 1 billion euros, cutting its stake in the German carmaker and decades-long ally to under 5 percent.
Germany's biggest bank said it placed 25 million Daimler shares with investors at 43.20 euros each, reducing its 6.9 percent stake to around 4.4 percent in a transaction worth 1.08 billion euros ($1.26 billion).
The bank made a book gain of around 300 million euros by selling the 2.5 percent stake, a spokesman said.
Daimler shares fell 2.3 percent by 1358 GMT to 43.08 euros, lagging a 1.4 percent drop in the DJ Stoxx European car sector index. Deutsche shares rose 0.2 percent to 82.43 euros.
The sale winds down a long chapter in Daimler's ownership history, as Deutsche has been one of its biggest investors. The German bank has been consistently reducing its stake from more than 10 percent last year.
Deutsche -- the carmaker's second-biggest shareholder after the Emirate of Kuwait, with 7.2 percent -- has been cutting its large stakes in some of Germany's biggest companies.
Such cross-holdings were mostly designed to give financial stability as Germany rebuilt after World War Two, though Deutsche's relationship with Daimler predated this arrangement.
Deutsche's departure as a main shareholder leaves DaimlerChrysler as one of the world's few major carmakers without a dominant investor, but analysts say its market capitalization of nearly 45 billion euros at Monday's closing price makes it a distinctly difficult takeover target.
German rival Volkswagen headed off any hostile takeovers by winning Porsche this year as a big investor, joining VW's home German state of Lower Saxony.
While the Porsche clan owns the sports car maker, the Quandt family controls BMW. The Fords watch over Ford Motor Co and the Peugeot family safeguards PSA. In Italy, the Agnellis protect Fiat, while in France, the state shields Renault.
The premier of DaimlerChrysler's home German state of Baden-Wuerttemberg has expressed concern about the vacuum in the company's ownership structure, but the world's fifth-biggest carmaker and largest truckmaker has played down any danger.
Chief Financial Officer Bodo Uebber estimated in May that hedge funds held between 10 and 15 percent of Daimler and talk occasionally flares of a hostile bid to break it up.
It is unclear how many hedge funds remain after the stock outperformed peers by more than 16 percent since early May.
A leveraged buyout by a pack of six or seven private equity firms would raise funding issues, given the likely downgrades at Daimler's large financial services arm after such a move.
"On paper it is easy to say you can break it up, but breaking up something of that size is a huge operation," said an investment banker. "It is something I certainly have looked at in the past, but personally I am a real sceptic about that happening."
Deutsche's declining say at Daimler does raise questions about whether DaimlerChrysler Chairman Hilmar Kopper -- a former Deutsche chairman -- will stay on past his term, which expires in 2007. But both companies stress that Kopper serves in a private capacity, not as Deutsche's representative on the board.