Geely increases ownership stake in Aston Martin
£234m investment confirmed as Chinese firm becomes third largest shareholder
Geely has become the third largest shareholder in Aston Martin, committing approximately £234m and acquiring c.42m existing Ordinary shares. The deal will also see a subscription created for c.28m New Shares, with both New and Old valued at 335p. The subscription stands to see Aston Martin receive £95m.
It all sounds like good news at a good time; a cash injection on the eve of a new car’s arrival is ideal, and the DB11 successor is slated to be the first among many. As alluded to before, moreover, Geely’s involvement with European brands like Lotus and Volvo has yielded a tremendous rate of progress. While it is impossible to grade the firm's influence behind the scenes, there are surely many less desirable investors than China’s most prominent automotive group.
The new deal includes a Relationship Agreement, which means Geely has the right to appoint a Non-Executive Director to the board. Once complete, Geely will assume ownership of around 17 per cent of company shares, behind only the Saudi Public Investment Fund (c.18 per cent) and the Yew Tree Consortium (c.21 per cent). Those majorities ought to remain in place for a little while at least - part of Geely’s arrangement says it cannot acquire any shares that will take its holdings beyond 22 per cent until next August (unless someone else attempts it in the meantime).
Geely Chairman Eric Li said: "Our decision to increase our shareholding in Aston Martin reflects our confidence in the company's growth prospects, its technologies and its management team. Since first acquiring our minority holding last September, we have worked collaboratively with Executive Chairman Lawrence Stroll and his colleagues and now look forward to exploring joint technology synergies and new growth opportunities to help this iconic automotive brand achieve its full potential."
Stroll, alluding to potential future utilisation of Geely's extensive EV expertise, noted: "This announcement is a further significant step towards delivering our ambition for Aston Martin. Geely Holding, who initially became a shareholder last year, sees tremendous potential for Aston Martin's long-term growth and success. They offer us a deep understanding of the key strategic growth market that China represents, as well as the opportunity to access their range of technologies and components. Geely shares our vision for Aston Martin and wants to be a more significant shareholder. This transaction enables the creation of a long-term partnership with Geely - a relationship that I believe will bring very significant value for all of our shareholders over time.”
Though it’s too early to speculate how exactly Aston will exploit that additional value, the template laid down elsewhere has established Geely's reputation for being a constructive presence. Polestar has plotted an impressive route to EV success since its launch, and its design-led attitude is redolent of the way Gaydon often approaches new ventures. We're due to see Aston's first electric car next year, but it obviously requires plenty of investment for what lies beyond. And who now would begrudge seeing a reimagined Rapide with Polestar 5 influence (and up to 884hp)? Regardless, let's hope Geely's enthusiasm is confirmation that Aston is on the right track.
From what I've read, the sooner that happens the better but there's a lot of debt.....
From what I've read, the sooner that happens the better but there's a lot of debt.....
Lance will only be out of a drive when his millions aren't valuable to someone. i.e never.
If he manages to move the entire kit & caboodle on to Geely he'll have done the company a great service - as it really only has a sustainable future under the roof a much larger engineering consortium.
Witness the laundry list of previous "rescuers" of the brand:
(1) Count Louis Zborowski;
(2) Lady "Dorothea" Charnwood;
(3) Bill Renwick;
(4) August Bertelli;
(5) Lance Prideaux Brune;
(6) Arthur Sutherland;
(7) David Brown;
(8) William Willson;
(9) Peter Sprague;
(10) Alan Curtis;
(11) George Flather;
(12) Victor Gauntlett;
(13) Tim Hearley;
(14) Peter Livanos;
(15) Nick & John Papanicolaou;
(16) George Livanos (Peter's father);
(17) Ford Premier Auto Group;
(18) David Richards;
(19) John Sinders;
(20) Kuwaiti Dar & Adeem Investments;
(21) Mercedes Benz
I think on past form, as car company acquisitions go, Geely seem to be relatively sympathetic. Compare what they've done to Volvo with what GM did to Saab.
I would love to see Aston Martin being a fully British concern to give us the pride the Italians have in Ferrari. But some realism needed.
1. AML has been an international operation for decades: USA (Ford), Saudi, Italian, German, Canadian and now Chinese funding and/or shareholding. German, Italian and Canadian people on the tiller. It’s nothing new.
2. Geely has done wonders for Volvo (also ex-Ford) and Lotus.
3. The electric era tech needs to come from somewhere. Geely has that. And to be honest, AML are not a tech powerhouse. There’s no real tech Geely can secrete away from AML. Its asset is mainly wrapped up in its brand, which is intrinsically linked with the UK.
4. It’s been bankrupt countless times over 110 years. It has no reason to still be around from a financial viewpoint. Previous owners have not made it long-term profitable, so why not let somebody else have a go?
The main concern will always be jobs in the UK, justifiably so. Lotus and Volvo now both are having Chinese-focused production. The UK is an R&D powerhouse for both of those brands. It’s what we’re good at as a nation. We generally get bored when it comes to later details like quality. Or profit.
Will an Aston Martin ever be made overseas? Most people would be horrified. But sorry folks - that bridge has already been passed when the first of the VH Rapides left Graz in Austria. And I never heard of AM owners shunning the “non-British” Rapides.
So in all, it’s sad the UK is not necessarily as good at the business of long term investment and commercial commitment as other countries, but that’s how it is. We may as well revel in our brilliance in design and innovation. There will always be a demand for that.
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