FRANKFURT (Reuters) -- Daimler AG has hedged its holding in Tesla Motors Inc. against a decline in value over the next three years, as it seeks to broaden its alliance with the U.S. electric-car maker.
"The objective of the transaction concluded is to protect the value of Daimler's shareholding in Tesla, [while] allowing Daimler to retain significant participation in any further appreciation of Tesla share price during the three year collar agreement," Daimler said in a statement late on Friday.
Tesla is supplying electric motors and batteries to Daimler for its Smart Fortwo electric vehicle and the new Mercedes-Benz B-Class EV, which goes on sale next year.
Daimler, which holds a 4.3 percent stake in Tesla, said in October it would like to expand its cooperation with the company.
"We are also demonstrating the long-term nature of our partnership and our intention to continue and to broaden the partnership in the coming years," Daimler's finance chief, Bodo Uebber, said in the statement.
Tesla also provides EV components to Toyota Motor Corp.
Tesla shares have more than quadrupled in value so far this year, but they have lost 26 percent since their record high at the end of September, following reports of its Model S sedan catching fire in traffic accidents.
The shares closed up $2.52 at $143.24 in Nasdaq trading on Friday. They reached a 52-week high of $194.50 on Sept. 30.