Aston Martin Is in Talks With Investors to Secure Funding
Aston Martin, the British luxury-car maker controlled by Investment Dar Co., is in “advanced” talks to sell new shares to investors to boost funding for future development.
The proposed plan will ensure the Gaydon, England-based company can “deliver its medium- and long-term growth plans,” Aston Martin spokeswoman Janette Green said in an e-mail, without providing details on possible buyers.
Kuwaiti owner Investment Dar has received competing bids from Investindustrial and Mahindra & Mahindra Ltd. (MM) for half the sports-car maker led by Chief Executive Officer Ulrich Bez, three people familiar said last week. Investindustrial, a European private-equity fund based in London, offered just under 250 million pounds ($400 million), with Indian automaker Mahindra then making a higher bid, they said.
Investment Dar, part of the group that bought Aston Martin from Ford Motor Co. (F) for 503 million pounds in 2007, has been seeking an investor for Aston Martin, the maker of luxury sports cars featured in James Bond movies, for months, people familiar with the matter said earlier this month. The talks have the support of Aston Martin’s owners, Green said late yesterday.
“The main question that you have to ask at Aston Martin is, ‘Who is ready to invest any further?,’” said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen. “There are clearly some people, but it seems the existing shareholders are not among them. Aston Martin is a strong brand, with great tradition, which has developed enormously under Bez’s leadership, but it needs investment to expand its market position.”
The winner of the bid would get 50 percent of voting rights and a 40 percent equity stake, one of the people said last week. While the Mahindra bid is higher, Investindustrial includes plans to use technology and car parts from AMG, the Mercedes-Benz unit that makes sports cars, two of the people said.
While Aston Martin still gets engines from Ford, it lost access to Ford’s other resources after the sale and remains the only global luxury brand that’s not part of a larger auto group.
That independence could be a handicap with the auto industry under pressure to develop technologies to improve fuel efficiency. Bayerische Motoren Werke AG is investing more than 1 billion euros ($1.3 billion) this year on making engines more efficient and developing electric vehicles. That sum exceeds Aston Martin’s 2011 revenue of 507 million pounds.
A new backer for the iconic British brand may help the maker of the 1.2-million-pound One-77 to boost volumes and develop cars that can challenge Volkswagen AG (VOW)’s Bentley and Fiat SpA (F)’s Ferrari. Investindustrial earlier this year sold Italian motorcycle maker Ducati Motor Holding SpA to VW’s Audi.
Most of Aston Martin’s models are based on the same aluminum platform introduced with the DB9 coupe in 2003 under Ford. An inability to invest in new architectures has stymied other independent carmakers, with Saab, the Swedish brand sold by General Motors Co. (GM) in February 2010, forced to halt production last year because of a cash shortage.
Volkswagen, which is Europe’s biggest carmaker, is able to keep development and production costs down by sharing architectures across its units. The Lamborghini Gallardo shares the same platform as the Audi R8, while the Bentley Continental Flying Spur and GT models are based on the same underpinnings as the VW Phaeton.
Aston Martin’s lineup mostly comprises two-door coupes such as the DB9, Vanquish and Vantage. The Cygnet city car, which it also offers, is based on Toyota Motor Corp. (7203)’s iQ. Aston Martin vehicles have been featured in 11 James Bond movies, including the vintage silver DB5 in the latest one, “Skyfall.”
The British carmaker’s adjusted earnings before interest taxes, depreciation and amortization last year fell 18 percent to 76.2 million pounds, with deliveries steady at about 4,200 vehicles.
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