Mercedes-Benz Will Buy Up To 20% In Aston Martin.
“Will Aston Martin slowly but surely become part of Daimler? It certainly seems that way”
Aston Martin shareholders will breathe a sigh of relief as a deal with Daimler’s Mercedes Benz in which it acquires up to a 20% stake in the financially troubled British luxury sports car and SUV maker includes access to next-generation hybrid and electric technology.
This likely to lead to Aston Martin becoming a part of Mercedes, while a new financing package will take the pressure of its stretched liquidity.
Daimler currently has a 2.6% stake in Aston Martin, which it said won’t be increased beyond 20%.
“We already have a successful technology partnership in place with Aston Martin that has benefitted both companies. With this new expanded partnership we will be able to provide Aston Martin with access to new cutting-edge technologies and components,” Mercedes product chief Wolf-Dieter Kurz said in a statement.
Aston Martin said it will raise about $1.7 billion to refinance existing debt, and unveiled a new business plan targeting volume of 10,000 a year by 2025, $2.6 billion in revenues and EBITDA (earnings before interest tax depreciation and amortization) of $652 million.
In 2019, Aston Martin produced about 6,500 vehicles.
Investment researcher Jefferies called the deal with Mercedes “clever”.
Bernstein Research analyst Arndt Ellinghorst said Aston Martin has been criticized for falling behind in planning for electrification so the access to Mercedes technology will be welcomed by shareholders.
Slowly but surely
“Does it mean Aston Martin will slowly but surely become part of Daimler? It certainly seems that way – at least on paper, this has industrial logic,” Ellinghorst said.
He said the new financing package was significant and robust and answered concerns about its liquidity problems.
It has been a roller coaster year for Aston Martin. New owner Canadian billionaire Lawrence Stroll replaced CEO Andy Palmer with Mercedes-AMG’s Tobias Moers. Aston Martin has been reeling from the pressure of launching its first SUV, the DBX, now on sale after much delay.
Aston Martin was floated on the stock market in October 2018, at a price of 19 pounds a share. But after profit warnings and weak sales, the shares have lost much of that value. When stock markets open Wednesday, expect fireworks.
Reuters’s Breaking Views described the deal as a lifeline for Aston Martin, which it said had an operating loss of 229 million pounds ($300 million) in the first 9 months of 2020, and is not expected to turn into a profit until 2022. Breaking Views said Daimler values the technology transfer to Aston Martin at 286 million pounds ($370 million).
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