Billionaire Lawrence Stroll beats Geely to takes 16.7% stake in Aston Martin

by James Attwood, Autocar UK 31 Jan 2020


A consortium led by billionaire Lawrence Stroll has bought a 16.7% stake in Aston Martin for 182 million pound sterling - sparking a major revamp of the firm's future product plan. Stroll beat Chinese car maker Geely, the owner of Lotus and Volvo, a part-owner of Smart and a significant shareholder in Daimler, to the deal after a decision to take Stroll's investment was agreed at a board meeting last night.

Stroll also owns the Racing Point F1 team, which under the terms of the new deal will be rebranded as the Aston Martin F1 works team from 2021 onwards. Aston has pledged to launch its Valkyrie hypercar this year, committed to a revised mid-engined car strategy and revealed it will delay the launch of its electric vehicles, including the relaunch of the premium Lagonda brand, until after 2025.

What Stroll's investment means for Aston Martin
To secure the 16.7% stake, the consortium led by Stroll, Yew Tree Overseas Limited, will buy 45.6 million new ordinary shares in Aston Martin Lagonda, at a price of 4 pound sterling per share. The consortium also includes JCB chairman Anthony Bamford, former Power Corp Canada boss Andrew Desmarais and Hong Kong fashion investor Star Chou.

The 500 million pound sterling investment will include 55.5 million pound sterling of short-term funding from Stroll to improve the immediate liquidity of the company, which will be refunded once the full share placing is finalised. The firm said the proceeds from the investment will be used to “improve liquidity and finance the ramp up in production of DBX and turnaround of the company’s performance.” 

In a statement confirming the deal, Aston Martin Lagonda said the move would “strengthen its balance sheet to necessarily and immediately improve liquidity and reduce leverage” following “the disappointing performance of the business through 2019”.

Aston Martin was floated in 2018 with a valuation of 4.5 billion pound sterling, but based on today's share issue is currently worth around 1 billion pound sterling.

As part of the investment, Stroll will join the Aston Martin board in the role of executive chairman, with the consortium also gaining the right to appoint a second board member.
 

What the Stroll deal means for Aston's future product plan and F1
According to the Aston Martin release, the current technology partnership between Aston Martin and Red Bull Advanced Technologies “will continue until Aston Martin Valkyrie is delivered.” There had been questions as to wether the partnership between the two firms on the hypercar would continue with new investors in place, and it is unclear if Red Bull's involvement in the mid-engined Valhalla project will continue unabated.

Aston Martin currently sponsors the Red Bull F1 team – and will continue to do so in 2020 –  but has thereafter agreed a 10-year deal under which Racing Point will become the official works Aston squad. The deal includes a five-year sponsorship agreement starting in 2021.

Stroll has also been linked to a deal to buy the Mercedes works team from the manufacturer at the end of this season, as first reported by Autocar. The German firm is understood to be considering the future of its F1 arm beyond the coming season. It is believed today's deal does not necessarily mean Stroll is out of the running to buy the squad.

Due to Aston Martin’s recent struggles, the firm has also agreed a ‘reset business plan’ to raise its performance, which includes both cash generation and changing its product plan.  The reset plan includes delaying investment in electric vehicles until beyond 2025, including delaying the relaunch of the Lagonda brand – scheduled for 2022 – until after that date. The Rapide E electric car project has been “paused pending a review”.

There remains a commitment to deliver on its range of mid-engined cars currently being developed, starting with the Valhalla in 2022.

The immediate priority will be on launching the DBX later this year, with the firm saying it has received 1800 orders to date. It will then update the Vantage in the Spring - including with a Roadster version – and start Valkyrie deliveries later this year. The firm will also seek to trim costs by 10 million pound sterling per year.

The mid-engined Vanquish will now be revealed after the Valhalla in 2022, while the firm will also develop a “fuel efficient, modular V6 engine with hybrid capabilities”, due to be introduced from the mid-2020s.

The firm also says special models will continue to be a key part to its plan, with one ‘heritage special’ and two ‘contemporary specials’ delivered each year. 

Who is Lawrence Stroll, who owns Aston Martin?
Stroll, father of Formula 1 driver Lance, is estimated to be worth in excess of £2 billion, having made his money investing and building up brands including Pierre Cardin, Ralph Lauren, Tommy Hilfiger, Michael Kors, Asprey and Garrard. The 60-year-old, born Lawrence Strulovitch, grew up in Montreal, Canada, and now mostly lives in Switzerland.

He is also famed for his car collection, which is most notable for including what many regard as the most valuable collection of classic Ferraris in the world, including a 330 P4 and a Daytona Spider. He also owns the Mont-Tremblant racing circuit in Canada.

The majority of Aston's shares are still held by the Kuwait-based Adeem/Primewagon group, while the Strategic European Investment Group, part of the Italian private equity group Investindustrial, currently holds around a one-third holding in the company. While the two groups previously owned a combined 61% of Aston Martin, the shares issued to Stroll's consortium reduces their holding to 50.5%.

Aston Martin deal at a glance
-Lawrence Stroll leads investment consortium, becomes Aston Martin chairman
-CEO Andy Palmer stays on
-Job and cost cutbacks to follow
-Aston business plan revised
-Valkyrie will be launched this year
-Mid-engined Valhalla will follow
-Mid-engined strategy to continue, launching 2022
-Lagonda launched delayed until at least 2025
-Electric RapidE project suspended
-Stroll's Racing Point F1 team to be rebranded Aston Martin from 2021