Dubai Holding has announced that it has acquired a $1 billion stake in DaimlerChrysler, making it the third largest shareholder in the German-US auto giant.

The acquisition was negotiated, structured and carried out by Dubai International Capital, which is part of Dubai Holding, said its chief executive officer, Muhammad al-Qarqawi.

"This is a perfect time to acquire shares in DaimlerChrysler as the company begins to bear the fruits of its merger with Chrysler," he said in a statement on Sunday.

"With the acquisition of such a significant stake ... Dubai Holding - through Dubai International Capital - has positioned itself as a significant international investor," added al-Qarqawi.

Commitment

"We welcome this, as Dubai International Capital is a shareholder with a long-term commitment convinced of DaimlerChrysler's future potential," DaimlerChrysler management was quoted as saying.

Dubai Holding was set up last October to run a host of "mega projects" designed to turn the affluent Gulf emirate of Dubai into a business and leisure hub.

Established on the instructions of Crown Prince Shaikh Muhammad bin Rashid Al Maktum, the company was to help start ventures in the fields of media, healthcare, tourism, property, energy and industry.