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Investindustrial wins battle for Aston Martin stake

The deal gives the carmaker an enterprise value of 780 mn pounds

Reuters  |  London/ Milan 

plans to invest $1 billion in new products and technology after Italian private equity fund agreed to buy a minority stake in the British luxury carmaker.

is buying 37.5% for $241 million via a capital increase agreed with majority Kuwaiti owner Investment Dar, said on Friday.

The Italian group beat tractor maker Mahindra and Mahindra in a two-way battle to invest in the company, whose sports cars were made famous by their appearance in James Bond spy films.

The cash injection will help better compete with Volkswagen's Bentley and rival UK luxury car manufacturer Jaguar Land Rover, which was bought by India's Tata Motors in 2008 and has since seen huge sales growth, especially in China.

The 99-year-old maker of the DB9 and Vanquish sports cars has struggled in recent years. Last week, it said it sold 2,340 cars in the nine months to September 30, 19% down on 2011.

Investindustrial's senior principal Andrea Bonomi said the group hoped to transform in a similar way to its revamp of luxury Italian motorcycle maker Ducati by expanding Aston's model range and strengthening its global dealership network.

Owned by Italy's Bonomi family, bought Ducati in 2006 and sold it for about 860 million euros last April to Volkswagen's Audi division.

said the deal would enable it to invest in new products and a technology programme up to 2018.

Bernstein analyst Max Warburton said it looked like Aston's owners were settling for a temporary fix because they were unable to attract another car manufacturer to invest at the price they wanted. "It doesn't look like a long-term solution," he said.

"This deal doesn't sort scale, access to technology, emissions or entry to new segments."

The British carmaker is owned by a consortium of chairman David Richards, Kuwait's Investment Dar and another Kuwait fund, Adeem Investment Co.

US-based Ford, which sold to them for $770 million in 2007, still holds a small stake.

said its shareholders' stakes "had been reduced accordingly" by the capital increase.

Aston Martin, perhaps best known for its classic DB5 sports car that featured in early Bond movies, makes its cars in Gaydon, Warwickshire, once part of England's motor manufacturing heartland.

The deal comes days after ratings agency Moody's put Aston Martin's non-investment grade B3 rating under review following a 16% fall in the carmaker's third-quarter revenue.

The British company said the deal gave the group an enterprise value of 780 million pounds, compared with a value of 630 million pounds prior to the agreement.

It added that no agreement had been made on a technical partnership for with Daimler AG's Mercedes, as some analysts had expected.

rival Jaguar Land Rover has spent some $800 million over the last five years on marketing and expanding its dealerships in China. The communist state is now close to becoming JLR's largest single market.

Aston sells some 15% of its vehicles in Asia but wants to significantly boost its presence in emerging markets.

First Published: Fri, December 07 2012. 19:24 IST