Aston Martin to Sell stake to F1 Billionaire
Aston Martin secured a deal to sell up to a 20 percent stake in the struggling company to billionaire Lawrence Stroll, providing much-needed funding to the luxury UK automaker to build a new SUV.
Aston Martin said that a consortium led by Stroll, a Canadian business person would pay a 16.7 percent stake of 239 million dollars. On completion of the rights issue, Stroll's stake could rise to 20 percent. The move will improve liquidity immediately and decrease leverage. Stroll gained Aston Martin's board backing after rival suitor Geely cooled on the plan of investing in the sports car manufacturer. Geely, who owns the Volvo from Sweden, the Lotus Cars from Britain and has a stake in Daimler, had been involved in a technology-sharing contract. Aston Martin also had talks with Chinese carmaker Geely, but he wanted to bring about more fundamental change than the proposal outlined.
Aston Martin is mainly the property of private equity groups in Italy and Kuwaiti. The fundraising plan hands a lifeline to the automaker that will ease the strains of funding as it prepares to commence building its first SUV, the DBX. The DBX is meant to provide the automaker with a profit generator that can be sold in higher volumes than the stylish sports cars in the James Bond movies. However, the cash inflow dilutes some of the existing shareholders, punctuating the disappointing turn of events since Aston Martin became public in October 2018. At the time, under CEO Andy Palmer, a former Nissan executive, the company was venturing a transformation helped by private equity funding. Since the company was floated, its share price has plummeted.
Aston Martin warned that its profit for 2019 would nearly halve as harsh trading conditions continued through its December peak. Last year, wholesale volumes dropped by 7 percent as the automaker tried to reduce stocks of dealers. Stroll, 60, who owns a vintage fleet of Ferraris, created his fortune and sold two fashion brands. Stroll took Tommy Hilfiger public in 1992 with his partner, Silas Chou, and later sold it to private equity investors. Stroll and Silas Chou listed the Michael Kors brand in 2011, eight years after acquiring majority control.
Stroll led a group of investors that took over the Formula One team from Force India after it was put into administration. Stroll renamed it as Racing Point and got its engines from Mercedes-Benz. The Stroll-led group is likely to include several other people such as JCB Chairman Anthony Bamford, businessman Andre Desmarais, Michael de Picciotto, telecoms investor John McCaw, and Hong Kong fashion industry investor Silas Chou, all of whom had previously worked with Stroll. Stroll is looking forward to work with the board and management team to continue investing in developing new models and technologies and start rebalancing production to prioritize supply demand.