Daimler AG’s Mercedes-Benz announced an enhanced tie-up with Aston Martin Lagonda which will see the former buy more shares of the latter.
New Aston Martin boss Lawrence Stroll sees the enhanced tie-up between his company and Mercedes-Benz as a ‘transformational’ moment as the German giants increases its stake to 20 percent – the maximum it will hold – from the current 2.6 percent.
The new agreement will see Mercedes-Benz grant Aston Martin access to a range of advanced technologies, which includes the next generation hybrid and electric powertrains along with other vehicle components and systems amid a big automotive change.
This will be done in exchange for new shares in Aston Martin which will be issued in several stages over the next 3 years, up to a total value of GBP 286 million. The British company is targeting revenue of c.£2bn and c.£500m of adjusted EBITDA by 2024/25.
Mercedes become one of their biggest shareholders as Stroll also welcomed Zelon Holdings, a European family office, and Permian Investment Partners as the other new shareholders of Aston Martin alongside the consortium which took over the company.
“This is a transformational moment for Aston Martin,” said Stroll. “It is the result of six months of enormous effort to position the Company for success to capture the huge and exciting opportunity ahead of us. In those six months, since I became Executive Chairman, we have made significant progress. We have appointed a world-class leadership team with deep experience of this industry.
“We have aggressively and successfully de-stocked the dealer network to rebalance supply to demand. We have strengthened the financial resilience of the business and have taken decisive action on costs. We have also very successfully launched the DBX. I am extremely pleased with the progress to date and that we are ahead of plan on timing, despite operating in these most challenging of times.
“Today, we take another major step forward as our long-term partnership with Mercedes-Benz AG moves to another level with them becoming one of the Company’s largest shareholders. Through this new expanded agreement, we secure access to world-class technologies to support our long-term product expansion plans, including electric and hybrid powertrains and this partnership underpins our confidence in the future.
“In addition, we have developed a new business plan targeting revenue of c.£2bn and c.£500m of adjusted EBITDA by 2024/25. This reflects the technology agreement and the delivery of new, compelling vehicles to achieve these growth ambitions. The plan will be underpinned by the new proposed financing that we are announcing today to strengthen the balance sheet, extend the debt maturity and improve liquidity.
“As part of this I am delighted to welcome Zelon Holdings, a European family office, and Permian Investment Partners as new shareholders in the Company. I, and my co-investors, are fully committed to delivering this plan, and our participation in this new substantial round of financing demonstrates both our confidence in the prospects for the business and our commitment to the future success of Aston Martin. This is truly game changing. We now have the right team, partner, plan and funding in place to transform the Company to be one of the greatest luxury car brands in the world,” summed up Stroll.
It remains to be seen how the automotive change reflects on the motor racing side, especially on F1, as to how much the cars are aligned together. The move, though, clears why Aston Martin were gunning for Sebastian Vettel – who also has shares of the company along with Toto Wolff – and why the German opted to take up the opportunity.
Excerpts from the Aston Martin release:
Expanded and enhanced strategic cooperation agreement (the “Strategic Cooperation Agreement”) with long-term partner, supplier and shareholder Mercedes-Benz AG:
- Provides access to a range of world-class technologies, including powertrain architecture (for conventional, hybrid, and electric vehicles) and future oriented electric/electronic architecture, for all product launches through to 2027.
- Removes the costs and risks associated with developing these technologies, enabling Aston Martin to focus its investment in other areas and expand its product portfolio.
- The Company proposes to issue new Aston Martin ordinary shares to Mercedes-Benz AG, to increase its holding up to a maximum of 20.0% in several stages; Mercedes-Benz AG will receive the right to nominate one non-executive director for appointment to the Company’s Board after its first shareholding increase.
Creating a world-class luxury automaker and maximising shareholder value creation:
- Reflecting the Strategic Cooperation Agreement, the Company has updated its strategic and product roll out plans to deliver profitable growth and cash generation over the medium-term and lay a pathway for significant shareholder value creation.
- Aston Martin is targeting volumes of c.10k units, revenue of approximately £2 billion and Adjusted EBITDA of approximately £500 million by financial years 2024 / 2025, underpinned by the Strategic Cooperation Agreement and targeted annual capital expenditure of £250m-£300m per annum between 2021 and 2025.
- Establishing a strategy to optimise the Company’s structure to deliver a level of operational excellence in line with the updated product and business plan.
Here’s the full release from Aston Martin: https://media.astonmartin.com/mercedes-benz-ag-strategic-technology-agreement-new-financing-and-q3-results/
Here’s news on Sebastian Vettel having Aston Martin shares
