RE: Why Morgan sold itself to the Italians

RE: Why Morgan sold itself to the Italians

Wednesday 6th March

Why Morgan sold itself to the Italians

After collecting our jaws from the floor on news of Morgan's sale PH collared the MD to find out more...



There was a smattering of surprises at this year's Geneva motor show, but only one that was big enough to be called seismic. The new Morgan Plus Six was a pleasant enough surprise, but it was the company's revelation that its family shareholders had sold a majority stake in the firm to Italian outfit Invest Industrial that caused both surprise and a degree of confusion.

Of course, the story of Morgan's family politics started a while back. Back in 2013 then Managing Director Charles Morgan was forced out of the company after a boardroom bust-up over various issues, the biggest being the amount being spent to develop the Eva, which was meant to be a new model powered by a BMW six-cylinder engine. Spotting a pattern here?

Although no longer in control - or even on the board - Charles Morgan remained the largest shareholder in the company. To get technical, ownership was split between him and three other family members, with a total of 52 per cent, with a collective family trust having the other 48 percent. So while Morgan was entirely Morgan-owned it's fair to say that it didn't make for the happiest of family dynamics.

Despite that, business was going well. Morgan has been selling strongly over the last few years and - if not quite rolling on a bed of fifties - obviously feeling flush. The Malvern factory was bought back in 2017, after being previously having been sold to raise funds. The company also bought its visitor's centre, which it hadn't owned since the war, and treated it to a big refurbishment. The entire £7m cost of creating the Plus Six also seems to have been done from revenue. 


So, in short, few obvious reasons from an outsider's point of view as to why you might want to sell a big stake in the firm to a venture capitalist.

Invest Industrial is the Italian outfit that put cash into Aston Martin a few years back, something which - following AM's recent IPO - has clearly given them an appetite for British sports car makers. According to Morgan's chairman Dominic Riley, Invest Industrial had been monitoring the company and its fortunes for some time. and its approach came at an opportune moment.

"The family had formed a council to discuss the future of the company some time ago," he said, "I told them that we were doing well and we had a good three-four year horizon with good prospects, but if we took a longer term view that the bar is getting higher in terms of technology, safety and research costs."

At which point, the Italian cavalry rides over the hill. "They were interested in a new investor to take Morgan to the next level, and then I got a phone call from Invest Industrial," Riley adds, "it was serendipity."


Only certain numbers have been released; we don't know how big Invest Industrial's majority stake is, but Riley confirms that the decision to sell was taken unanimously by all four family shareholders, including Charles Morgan, and that all of them still maintain a stake in the new company, with the workforce also set to receive shares.

Nor do we know how much money the Italians have put in, although Riley says it is "very significant in the context of Morgan." The company made a £3.2m net profit on £33.8m revenue in 2018 - a healthy margin in the car game - but has ambitions to increase that substantially with the help of new investment.

"We are going to at least double production in the next three to five years; probably go beyond that," Morgan told us."We're doing about 750 cars now. We will go to 1500 or beyond in that period, but it's an incremental evolution of scale."

The money isn't just going to be used for developing new models - although Morgan admits the plan is to use the new CX architecture to underpin a fuller range - but also to create demand for them.


"You will see a strong increase in sales and marketing, particularly if you look outside the UK where it tends to be down to the dealers. We're going to help, support them with advertising and running events. We want every dealership, wherever in the world, to have an element of Malvern and the factory to it."

The U.S. is also a big opportunity; Morgan hasn't sold a four-wheel model there since the Aero 8's exemption from requiring smart airbags ended. The company is already planning to go back under less onerous "replica car" requirements, indeed it has already sold some modern cars there with engines to be fitted locally. But Morgan hopes it will be able to arrange a bigger launch with U.S. homologated models.

Ambitious? Certainly. But PH was assured that the hallowed traditions held in such high esteem at Malvern will be fully respected - Morgans will still be made by hand in Worcestershire. It's just that there are going to be many more of them. 


Author
Discussion

zeta3

Original Poster:

41 posts

100 months

Wednesday 6th March
quotequote all
Want to see the 3 wheeler with a Moto Guzzi engine

simonrockman

5,738 posts

194 months

Wednesday 6th March
quotequote all
I hope they don't fiddle too much.

If you get the chance to do the factory tour you should go. They run every half an hour and are a major source of revenue fo the company, and are excellent.

tihouss

11 posts

71 months

Wednesday 6th March
quotequote all
[quote]all of them still maintain a stake in the new company, with the workforce also set to receive shares.
[/quote]
Amen to that. Happy involved workers make better cars!

Also, even if I will probably never own a Morgan, it's good to know they're doing well. One of the rare brands on the market that isn't offensive to anyone!

daimlerv8

1,232 posts

19 months

Wednesday 6th March
quotequote all
Visited the factory on 1 March 1982 to collect a Ford crossflow engined 4/4,the factory tour was thrown in!

biggrin

tombstone

192 posts

152 months

Wednesday 6th March
quotequote all
Hopefully they'll also remove the blinkers from their parts supply chain and stop upsetting owners and independent workshops...they might actually get some repeat customers for cars then! Too many 'agents' are putting customer off the brand with their after sales service, and trying to get parts from the factory is like trying to get blood from a stone!
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Craikeybaby

8,857 posts

164 months

Wednesday 6th March
quotequote all
simonrockman said:
If you get the chance to do the factory tour you should go. They run every half an hour and are a major source of revenue fo the company, and are excellent.
It was a great venue for a PHSS!

eldar

12,103 posts

135 months

Wednesday 6th March
quotequote all
simonrockman said:
I hope they don't fiddle too much.

If you get the chance to do the factory tour you should go. They run every half an hour and are a major source of revenue fo the company, and are excellent.
Second this. Went a couple of months ago, and a great afternoon. Fascinating to watch the manufacturing process, and the care and skill required to build the cars.

MrC986

2,241 posts

130 months

Wednesday 6th March
quotequote all
Yep, the news surprised me too. Good in some ways I'm sure in terms of investment, though it's just another nail in our UK car manufacturing surely?

jsc15

743 posts

147 months

Wednesday 6th March
quotequote all
Hope they reinstate the Eva plans, it was/is a lovely looking thing, and retains the retro touches whilst appearing a bit more practical

Enricogto

624 posts

84 months

Wednesday 6th March
quotequote all
MrC986 said:
Yep, the news surprised me too. Good in some ways I'm sure in terms of investment, though it's just another nail in our UK car manufacturing surely?
How so if they are doubling production in Worchestershire?

bristolracer

2,701 posts

88 months

Wednesday 6th March
quotequote all
Nah it will be sold to VAG group in 5 years time

You will be able to have a choice of nostalgia badges on your Audi Morgan Porsche Lamborghini EV

Tuna

9,791 posts

223 months

Wednesday 6th March
quotequote all
simonrockman said:
I hope they don't fiddle too much.

If you get the chance to do the factory tour you should go. They run every half an hour and are a major source of revenue fo the company, and are excellent.
Very true. Then do the Lotus factory tour, compare and contrast. Both companies are hopefully heading for greater success.

cardigankid

7,379 posts

151 months

Wednesday 6th March
quotequote all
Yes, it would be an awful pity if Morgan became a dismal failure like Lamborghini, Porsche and Bentley, wouldn't it?

I hope VAG do get it, because they are a car company, not a brand investor looking for a turn.

"We want every dealership, wherever in the world, to have an element of Malvern and the factory to it".

What is nice about a Morgan dealership is that it is what it is, without a great deal of pretence. What is nice about Pickersleigh Road is that it is Pickersleigh Road. Are we now going to start building Disneyfied red brick car showrooms serving real ale?

Look, it could turn out for the best. It was past the stage where the family were going to run it well. The word Fenwick comes to mind.

samoht

874 posts

85 months

Wednesday 6th March
quotequote all

So, a Morgan IPO in 2025? II will presumably want to make an exit at some point.

bristolracer

2,701 posts

88 months

Wednesday 6th March
quotequote all
cardigankid said:
Yes, it would be an awful pity if Morgan became a dismal failure like Lamborghini, Porsche and Bentley, wouldn't it?

I hope VAG do get it, because they are a car company, not a brand investor looking for a turn.

"We want every dealership, wherever in the world, to have an element of Malvern and the factory to it".

What is nice about a Morgan dealership is that it is what it is, without a great deal of pretence. What is nice about Pickersleigh Road is that it is Pickersleigh Road. Are we now going to start building Disneyfied red brick car showrooms serving real ale?

Look, it could turn out for the best. It was past the stage where the family were going to run it well. The word Fenwick comes to mind.
I wish them well
Times change, the world moves on, the car continues to evolve,nostalgia pulls your heartstrings as the world speeds up and you slow down.
plus ca change

cardigankid

7,379 posts

151 months

Wednesday 6th March
quotequote all
Or, more accurately, the family shareholding had fragmented to the point where they couldn't agree on any course but selling out. It doesn't have to happen, but it does, a lot.

NJJ

145 posts

19 months

Wednesday 6th March
quotequote all
Was on the Morgan stand earlier at GIMS and there was zero interest in showing me around the new Plus 6. Unless you were a current 'mature' customer or known to the brand it seemed that management didn't want to know or were too busy on their phones. Shame as I was quite taken with their new model and wanted to know more. Here's hoping this sell out brings a better class of PR.

andymac

106 posts

222 months

Wednesday 6th March
quotequote all
Sad in a way another old family business cashing in ..cant be blamed I guess as currently Morgan are in the best of shape they have ever been ,good time to go for it.

Anyhow Morgan welcome to the Lotus/Aston world hope it goes well they deserve its a 110 year old car company !! Not many of those around

P.S Would love to see the EVA back as a possible.

rallycross

9,691 posts

176 months

Wednesday 6th March
quotequote all
Good luck Morgan! it would be great to see them continue to do well.

It’s amazing they made £3m plus profit in today’s market.

Maybe they should subcontract the spares to a spin off 3rd party operation ( with x Morgan staff ) and use this investment money to develop and build a future product range - use of Bmw 6 cylinder engines would be a great match.

And before anyone suggests it lets not have any new diesel Fiat powered Morgan people carriers! or SUV’s or ‘Softroaders’ .



Edited by rallycross on Wednesday 6th March 20:47

simonjrwinter

122 posts

197 months

Wednesday 6th March
quotequote all
The beginning of the end for Morgan?
These big investors are not known for their sympathy with brands, merely profits. While you or I might put our last penny into something we are passionate about, these big investors ONLY care about the bottom line. I worked in business media for 25 up until I retired and it’s an oft repeated formula. If something isn’t making money ( or not enough) it’s canned.
I REALLY REALLY hope I’m wrong, but greed and the lure of money may be the kiss of death for MMC