Luxury sports car-maker Aston Martin Lagonda has agreed to sell a £182 million stake to a consortium led by a Canadian billionaire as part of a major fundraiser to protect the future of the British manufacturer.
The company, known for making James Bond’s cars of choice, said it will raise a total of £500 million through the group’s investment as well as a £318 million rights issue supported by major shareholders.
Aston Martin said a consortium led by Lawrence Stroll, owner of Formula One team Racing Point, has purchased a 16.7% stake, with the option of increasing to 20% once the rights issue takes place. Stroll’s consortium beat a rival bid from Chinese automotive giant Geely, which already owns Volvo, Lotus, the London Electric Vehicle Company and a chunk of Daimler (makers of Mercedes-Benz).
In conjunction with the investment from Stroll, Aston Martin is cutting back its electric ambitions to concentrate on its current product range. The intended resurrection of the Lagonda name as an electric luxury car brand to rival Rolls-Royce has been cancelled, while the future of the company’s first electric model, the Rapide E, appears to be in doubt.
Cash-strapped but still taking over an F1 team
The company is using Lawrence Stroll’s ownership of the Racing Point F1 team to rebrand the operation as a works Aston Martin Racing team from 2021. The company’s current sponsorship of the Red Bull Racing F1 team will end after this season.
However, Aston Martin’s hypercar collaboration project with Red Bull is set to continue. Red Bull Advanced Technologies (Red Bull Racing’s technological and engineering department for external clients) has announced that it will continue to work with Aston Martin on the Valkyrie hypercar project.
The ultra-exclusive road car is in the final stages of development, with the first batch of 150 road cars due to be delivered to customers at the end of the year. It will feature a Formula 1-inspired hybrid powertrain, with an electric motor and battery system developed by EV experts Rimac mated to a 6.5-litre V12 petrol engine, promising a combined output of 1,175hp and 900Nm of torque.
“No alternative” to finding a wealthy investor
Chairwoman Penny Hughes said Aston Martin’s “difficult trading performance in 2019” put severe pressure on its liquidity and left the company with “no alternative” but to secure significant investment.
“Without this the balance sheet is not robust enough to support the operations of the group,” she said.
“Notwithstanding recent weak trading, the strength of the Aston Martin brand and our expanding portfolio of cars has allowed us to attract a strong new partner in Mr Stroll to support the turnaround of the business.”
The car-maker said 2019 was a “disappointing year” after trading fell below expectations due to weak sales of its Vantage model, as well as poor sales across its vehicles in Europe and the UK.
Mr Stroll is also set to join the company’s board as executive chairman, replacing Ms Hughes, as part of the deal.
He said: “Aston Martin Lagonda makes some of the world’s most iconic luxury cars, designed and built by very talented people.
“Our investment announced today underpins the company’s financial security and ensures it will be operating from a position of financial strength.”
Andy Palmer, Aston Martin president and group chief executive, said: “The past year has been a regrettably disappointing and challenging time for the company.
“Today’s fundraising is necessary and provides a platform to support the long-term future of the company.
“Mr Stroll brings strong and proven expertise in both automotive and luxury brands more widely, which we believe will be of significant benefit to Aston Martin Lagonda.”
Shares in the company surged 28.4% to 516.9p in early trading on Friday.