Aston Martin rejects Geely bid, welcomes Saudi investment

Saudi Arabia's sovereign wealth fund has become Aston Martin's second largest shareholder, and will help the company pay off debt and launch new products.

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Aston Martin Lagonda is aiming to raise £653 million (A$1.14 billion) to fund its product rollout, though it has rejected a proposal from Chinese automaker Geely.

The capital raise will help fund a range of new models, including new sports cars due next year, an expansion of the DBX range and upcoming mid-engine vehicles like the Valhalla.

It’s previously confirmed it’ll introduce substantially updated Vantage, DB11 and DBS models in 2023.

Aston Martin is also aiming to launch its first plug-in hybrid in 2024, its first electric vehicle in 2025, and have a fully electrified sports car and SUV line-up by 2030.

It has previously said it would have a “fully electrified” line-up by 2026.

Saudi Arabia’s Public Investment Fund, which also has a stake in McLaren, has become a new anchor investor and the second largest shareholder, spending £78 million (A$136.53m) for a 16.7 per cent stake in the firm.

But Aston Martin’s board has summarily rejected a proposal 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.”

Aston Martin is issuing 23.3 million new ordinary shares to raise approximately £78 million (A$136.32 million).

It’s also raising approximately £575 million (A$1b) via an underwritten rights issue, while the PIF, together with Aston Martin Chairman Lawrence Stroll’s Yew Tree Consortium and Mercedes-Benz, is investing £335 million (A$585 million) inclusive of both the rights issue and new shares.

It says it’ll spend up to half of its capital raise to repay existing debt, with the balance to both accelerate future expenditure and to “maintain a substantial liquidity cushion”.

Aston Martin is in the process of electrifying its line-up, which requires significant investment. Currently, its only electrified model is the Chinese-market Aston Martin DBX Straight Six with its 48V mild-hybrid system.

It’s unclear what form Aston Martin’s first electric vehicle will take or what platform it will use, though notably the PIF is the main backer of American EV firm Lucid.

The Lucid Air luxury sedan’s platform will soon underpin the Lucid Gravity SUV, though it’s unclear if the American startup would supply these underpinnings to any other brands.

Considering Mercedes-Benz is one of Aston Martin’s key shareholders and has supplied much of its technology before, its upcoming AMG.EA electric vehicle architecture would appear to be a logical choice for the British brand.

There’s usually a delay before Aston Martin gets its hands on Mercedes-Benz components, but the German giant is set to launch its first AMG.EA-based model in 2025.

Aston Martin had originally intended to produce, at least in limited numbers, an electric version of its Rapide. It ended up scrapping that plan.

The PIF’s 16.7 per cent stake in the firm is second only to the Yew Tree Consortium, which will go from 22 per cent to 18.3 per cent following the proposed placing.

Mercedes-Benz will have a 9.7 per cent stake, down from 11.7 per cent.

Aston Martin says its 2022 outlook remains accurate, citing strong demand across its product lines.

It’ll release its interim results for the first six months of 2022 on July 29.

Aston Martin says its entire GT/sports car range is sold out into 2023, while DBX orders are up 40 per cent year-over-year.

“Overall, this is a game changing event for Aston Martin, supporting the delivery of our strategic plans and accelerating our long-term growth potential,” said chairman Lawrence Stroll.

“It transforms our balance sheet, liquidity and cashflow profile and provides greater clarity on our pathway to become sustainably free cash flow positive and create significant shareholder value.

“With the new leadership team in place, led by Amedeo Felisa, we have the right team and the right strategy to fully realise the long-term potential of Aston Martin.”

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William Stopford

William Stopford is an automotive journalist based in Brisbane, Australia. William is a Business/Journalism graduate from the Queensland University of Technology who loves to travel (remember that?), briefly lived in the US, and has a particular interest in the American car industry.

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