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Aston Martin Stake Sold To Italian Investor

Will It Make An SUV, Do An Engine Deal With Mercedes?

News that Italian equity fund Investindustrial bought 37.5 per cent of Aston Martin for around €184 million from Investment Dar of Kuwait inspired much talk of James Bond, Spectre, hidden machines guns and ejector seats, and some disappointment that BMW didn’t buy it.

Maybe Investindustrial will eventually pass the stake on to BMW. After all, it recently owned Ducati motorcycles of Italy and sold that to Audi. Indian carmaker Mahindra & Mahindra was apparently beaten at the post for the Aston Martin interest.

Aston Martin has been struggling, with sales in the first nine months of 2012 at 2,140 – almost 20 per cent lower than the previous year. The company has missed out on the luxury car boom in China, with only five per cent of its sales there.

After the deal was announced, Aston Martin said it would spend $1 billion on new products and technology.

 Moody’s Investors Service had looked at Aston Martin’s books, and didn’t like what it saw in the form of a €4.4 million loss, putting the company under review for a possible credit downgrade.

Reuters’ Breaking Views said Aston Martin may plug an obvious gap and develop an SUV.

“Befriending a big automaker, beyond Aston’s extended engine pact with Ford is a must, too. Even with fresh cash, developing new platforms and engines alone is tough, especially as emissions standards tighten. Mercedes would be ideal,” said Breaking Views columnist Quentin Webb.

A month before the deal was announced, Bernstein Research analyst Max Warburton speculated that Daimler, BMW, Nissan, Toyota and Tata had all looked at Aston Martin. Warburton argued that BMW was the natural buyer, not least because of its problems with the 6 Series segment.

“Aston would surely be a perfect fit with the company’s premium brand strategy, with operational and management synergies with other U.K. assets like Rolls Royce in Sussex,” Warburton said.

 Meanwhile Aston Martin is getting free publicity, as its 1965 DBS wows the crowds watching the latest James Bond movie Skyfall.

Neil Winton – December 20, 2012

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