The acquirement, which was revealed in a regulatory filing by Daimler on Friday, makes Geely chairman Li Shufu the largest single shareholder of the German group, overtaking the Kuwait Investment Authority, which holds 6.8 percent.
Nearly 71 percent of Daimler shares are held by institutional investors.
The deal marks Geely’s further expansion into the European premium automotive market and is the latest move by Geely to build up its international presence.
The Chinese automaker already owns Swedish automaker Volvo Cars and black taxi maker the London Electric Vehicle Company.
The group also took a 49 percent stake in troubled Malaysian automaker Proton, a controlling interest in British sports car brand Lotus, as well as acquiring a flying-car business called Terrafugia in 2017.