Abu Dhabi's state investment fund, Aabar Investments, has decided to invest Euro1.95 billion ($2.65 billion) in Daimler, which will make it the single biggest shareholder in the group, a joint statement issued on Sunday has said.

As per the arrangement, Aabar has agreed to take a 9.1 per cent stake in Germany's Daimler, the manufacturer of Mercedes Benz cars and the world's biggest truck maker, the companies said.

"We are delighted to welcome Aabar as a new major shareholder that is supportive of our corporate strategy," Daimler chairman Dieter Zetsche said.

Aabar is listed on the Abu Dhabi Securities Exchange and directly invests in various sectors including energy, infrastructure, real estate, automotive and financial services companies. Aabar will take the lion's share of the 96,408,000 new shares to be issued by Daimler at a price of Euro20.27 a share, said the joint statement.

The deal is to be put to an annual shareholders' meeting for approval on April 9, it added.

"Daimler is an iconic brand and a financially strong company with a reputation for excellence worldwide," Aabar Chairman Khadem Al Qubaisi said.

Once the deal goes through Kuwait, which has invested in Daimler since 1974 and was previously the biggest shareholder, will see its stake reduced to 6.9 per cent from the current level of about 7.6 per cent.