The investment group of Aston Martin chairman Lawrence Stroll is increasing its stake in the British sports car manufacturer, reportedly to thwart a takeover by Geely.
Autocar reports the Yew Tree investment group has invested around £50 million (A$90 million) in recent months to take its shareholding to 28.29 per cent, up from 19 per cent earlier in the year.
The buy-up comes as Aston Martin share prices have crept up slightly – from 90p in November to around £1.70 today (A$1.62 to $3.06), which puts the value at £1.2 billion (A$2.16bn).
The company had a rocky public listing in 2018, and its valuation is well down from the £4 billion (A$7.19bn) figure at the time of the IPO.
Autocar notes if Yew Tree’s stake reaches 29.99 per cent, the consortium is required under the takeover code of practice to make a mandatory offer to buy the remaining shares, though insiders reportedly deny there are plans to take the company private again.
Geely purchased a 7.6 per cent stake in Aston Martin Lagonda back in October for £66 million (A$118.73 million), with the company’s CEO Li Shufu reported to be looking at increasing this to 10 per cent – and Aston Martin’s low share prices would make now a good time to attempt this.
It bought up shares after Aston Martin issued additional stock to raise funds to pay down its debt.
Shufu was said to be looking to establish close relations between Aston Martin and Lotus through its shareholding.
Geely’s stake in Aston Martin for now remains smaller than that of the Saudi Public Investment Fund (18.7 per cent) and Mercedes-Benz (9.7 per cent).
“As a group of investors we share a firm belief that Aston Martin is undervalued and that, despite the recent supply chain challenges, it is well set to continue its growth trajectory in the ultra-luxury high performance automotive business,” said Mr Stroll in November.
“Our collective confidence in the medium and long term success of the business is driven by the strength of the order book, the exciting portfolio of new products that are set to come to the market and Aston Martin’s incredible global brand awareness.”
Mr Stroll didn’t comment on whether his investment group’s increased shareholding was designed to block Geely and a potential hostile takeover.
Aston Martin’s board summarily rejected a proposal in July from the Atlas Consortium – consisting of Geely and InvestIndustrial – to invest £1.3 billion (A$2.27b) in the British sports car manufacturer, saying “there is no basis for further discussion”.
“The Board of Aston Martin believes that the Proposal markedly overestimated the Company’s new equity capital requirements, would have been heavily dilutive for existing shareholders, and comprised a number of execution obstacles,” the company said in a statement.
“Furthermore, the structure of the Proposal and the nature of its delivery are such that the Board of Aston Martin considered this an attempt by the Atlas Consortium to acquire a controlling and prospectively majority ownership position without any premium paid to existing shareholders.”
Mr Stroll went further than his company’s prepared statement, calling Geely’s move a “disguised approach” to “buy the company on the cheap, coming through the back door rather than going through the front door and paying a premium”.
Aston Martin is working through its electrification strategy after a period of financial and managerial turmoil.
The most recent, publicly announced plan will see Aston Martin launch its first ever EV in 2025, and have a fully electrified lineup from 2026.
Geely is well ahead of Aston Martin in the EV space, offering numerous products across brands under its umbrella such as Volvo and Polestar.
Geely has proved quite willing to buy into foreign automakers. It currently has a controlling interest in Volvo, its EV spinoff Polestar, LEVC (producer of London’s iconic black taxi cabs), Lotus, and Proton.
This is on top of its own selection of in-house brands, including Lynk & Co, Zeekr, Geometry, and others.