Friday 7th December 2012

Aston sells stake

Italian investment firm buys 37.5 per cent stake in Aston Martin for £150m

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It's no secret Aston Martin is badly in need of a cash injection and has been courting investors, with Indian firm Mahindra and Mahindra originally touted as one potential stakeholder.

£150m for just over a third of this

But Aston Martin has instead sold the 37.5 per cent chunk of the firm to Italian consortium Investindustrial, the £150m this will bring in part of a half billion pound spending plan aimed at reviving the brand's fortunes. Investindustrial previously held a stake in Ducati, before selling this to Audi.

Investindustrial joins the Kuwaiti firm The Investment Dar as backers for Aston Martin, David Richards saying "With this partnership and the continued commitment of The Investment Dar, we look forward to working with our shareholders as we realise our vision and exciting future plans." For Investindustrial's part senior principal Andrea Bonomi said "We are looking ... to achieve a similar transformation and rejuvenation that we achieved with Ducati by expanding the model range and strengthening the dealership network throughout the world."

Aston Martin has been fighting claims that its range has stagnated of late, telling PistonHeads earlier in the year that its Vertical Horizontal construction technique is 'more than just a platform' and, despite appearances, there is more to the product range than generic spin-offs from an increasingly overstretched base package. The new Vanquish and revised DB9 may look familiar but there's real development under the skin, says Aston.

It'd be nice to see a bit more evidence of that in the finished products - perhaps with a bit more money in the coffers we'll get to see just that.

[myhandle]

Good luck! I hope it works.

[365daytonafan]

Be interesting to see what Aston does with the money. To put a little perspective Ferrari's accounts recorded a spend of €143m in 2011 and a a similar amount in 2010 (split between capitalised and non capitalised R&D) extend that over five years and that is more than the total £500m Aston are talking about assuming that is all for R&D.

It is also resonable to assume that some of Ferrari's R & D cost has been absorbed into the Fiat group as a whole notably the engine development work done on the new range of engines for Maserati (which Ferrari will also use). Porsche (obviously a much larger company than Aston or Ferrari) recorded approximately €1bn of expenditure on R&D in 2011 (not surprisinging considering the 991 and Boxster launches in latr 2011 early 2012.

The point is £500m sounds an impressive number but at best it levels the playing field with it's rivals in terms of investment in new product.

[dibblecorse]

Dear PH, Did you delete my thread on this ????

[MrTappets]

If Aston put all of this into one new model, say a new Vantage, it would end up competitive for a couple of years, but I think there needs to be consistent investment before the products catch up properly.

[PascalBuyens]

MrTappets said:

If Aston put all of this into one new model, say a new Vantage, it would end up competitive for a couple of years, but I think there needs to be consistent investment before the products catch up properly.

And then you'd probably have all the naysayers having a go at A-M again for having a car that looks too similar to an Aston...

[jakeb]

Figures dont seem to add up considering they paid Ford £479m for the company in 2007. On the face of it the company is only worth £400m now.......... Can't really see where the rest of the money is going to come from? Seems like a bit of a fire sale unless both sides are going to issue a load more shares and bung some money at it?

[Harry H]

Scary how desperate Aston must be. Seem incredibly cheap to me

[soad]

dibblecorse said:

Dear PH, Did you delete my thread on this ????

Still there:
Italians buy heaviily into Aston Martin from Kuwaiti
http://pistonheads.com/gassing/topic.asp?h=0&t...

[r11co]

Bye Bye Aston (again). What a bo11ock to drop not getting one of the new models in the latest Bond film. Jaguar and Land Rover featured more, and I suspect 007's connections with Aston are now at an en passe (don't want to spoil the film for the 3 people that still haven't seen it, but there's good reason to think that the connection is in fact now totally severed).

[B10]

"We are looking ... to achieve a similar transformation and rejuvenation that we achieved with Ducati by expanding the model range and strengthening the dealership network throughout the world...............then flog it for a tidy sum to VW"

[J B L]

r11co said:

Bye Bye Aston (again). What a bo11ock to drop not getting one of the new models in the latest Bond film. Jaguar and Land Rover featured more, and I suspect 007's connections with Aston are now at an en passe (don't want to spoil the film for the 3 people that still haven't seen it, but there's good reason to think that the connection is in fact now totally severed).

It wasn't ready. Marketing people at Aston were very dejected about the whole thing to be fair but it just wasn't there!

Connection's still there.

[r11co]

B10 said:

"We are looking ... to achieve a similar transformation and rejuvenation that we achieved with Ducati by expanding the model range and strengthening the dealership network throughout the world...............then flog it for a tidy sum to VW"

Essentially, yes!

Mercedes weren't interested so now hoping to be absorbed by another big player. Might be a fit with Bentley sharing a platform...

[CampDavid]

365daytonafan said:

Be interesting to see what Aston does with the money. To put a little perspective Ferrari's accounts recorded a spend of €143m in 2011 and a a similar amount in 2010 (split between capitalised and non capitalised R&D) extend that over five years and that is more than the total £500m Aston are talking about assuming that is all for R&D.

It is also resonable to assume that some of Ferrari's R & D cost has been absorbed into the Fiat group as a whole notably the engine development work done on the new range of engines for Maserati (which Ferrari will also use). Porsche (obviously a much larger company than Aston or Ferrari) recorded approximately €1bn of expenditure on R&D in 2011 (not surprisinging considering the 991 and Boxster launches in latr 2011 early 2012.

The point is £500m sounds an impressive number but at best it levels the playing field with it's rivals in terms of investment in new product.

I wish more people posted like this.

I fear for AML, when it was on it's own it didn't need to compete on numbers. Now it's in a position where it's fighting some very healthy competition.

[MycroftWard]

So that values the business at around £400M then? Seems cheap for such an iconic brand.

I guess the best thing for them would be to sell out to a major car manufacturer as they did with Ford.

[BBS-LM]

If I'm right in thinking, £150m is not a lot of money in the car industry, and seem not allot for 37.5%. in Aston Martin

[r11co]

J B L said:

It wasn't ready.

That tells you everything you need to know right there - not enough money/wherewithal get on the massive marketing bandwagon that is essential to the brand. Even a visually accurate mock-up would have sufficed. The timetable for the film was known since before the MGM sale and even just getting the exterior signed off and bolted to a DBS or even a Ford Explorer chassis would have done the job (worked for Ford and the Mondeo - the car used in Casino Royal had a 'pre-production' interior ie. not much trim apart from what showed on camera because the production tooling hadn't been made yet).

Edited by r11co on Friday 7th December 14:02

[SimonV8ster]

That seems quite good value for money doesn't it ?

I know if i'd won a rollover on the Euro lottery i'd buy a stake like that to keep it British and all that - what, what ??

[MogulBoy]

dibblecorse's Reuters news headline said:

"Italian private equity fund Investindustrial has signed a deal to buy 37.5 percent of Aston Martin Lagonda Ltd from its Kuwaiti owner Investment Dar.
Investindustrial is investing 150 million pounds ($241 million) in Aston Martin in the form of a capital increase, the British car-maker said on Friday."

All very confusing... Are they buying some of Investment Dar's stake from them or, subscribing for new equity (with the knock-on dilution of all exisitng shareholders stakes)?

No news about how they plan to raise the other £350m but I will assume that the £150m wouldn't be on the table/going in now if there was a material uncertainty over that and we'll probably see some further clarification in due course but as with all private companies (and many public!) we will never be privvy to all of the salient facts.

This is good news for the future of Aston as a marque though IMO but the fact that such sums need to be injected now simply confirms that the Kuwaitis are not likely to see the return on investment that they might have initially hoped for.

[peatmoor]

Shall we do a PH whip round?

[bakerstreet]

Having watched Ducati go from three bikes in the range to 7 (I think), I can only hope that this is a good move