*ASTON MARTIN, DAIMLER SIGN SUPPLY, DEVELOPMENT AGREEMENTS
*ASTON MARTIN, DAIMLER TO DEVELOP, SUPPLY ENGINES
*DAIMLER TO RECEIVE UP TO 5% EQUITY IN ASTON MARTIN
*DAIMLER, ASTON MARTIN PLAN E/E COMPONENT SUPPLY
FT : Mercedes-Benz to take Aston Martin stake
Aston Martin has reached an agreement with Mercedes-Benz under which the German carmaker will supply engines in exchange for as much as a 5 per cent stake in the British sports car company.
Aston, which has struggled to compete with better-funded luxury carmakers in recent years, will announce the agreement on Thursday, two people with knowledge of the deal told the Financial Times.
Aston and Daimler, Mercedes’ owner, signed a letter of intent in July to begin talks on a partnership. Daimler will get observer status on Aston’s board in addition to an initial 4 per cent stake in the non-cash deal.
The German company will increase its holding to 5 per cent of non-voting shares in Aston, dependent on further development of the agreement, such as a looming deal for Daimler to share development of its electronic systems and parts, the people said.
The British brand, famed for its role in the James Bond novels, will win access to the technical expertise of Mercedes’ high-end AMG division, in order to develop new V8 engines to power its next generation of models, seen as key to the company’s attempts to reboot itself after years of underfunding and ownership changes.
Aston’s sales slumped during the credit crunch and the company struggled to match investments made by rival marques such as Jaguar Land Rover or Bentley, which are owned by large automobiles groups with deep pockets and colossal research and development budgets.
The agreement will enable Aston, which plans to announce its new chief executive to succeed Ulrich Bez in the first quarter of 2014, to avoid the huge costs associated with developing its own engines.
It also gives Daimler a foothold in one of the world’s most prestigious car brands. Aston’s current engines are developed in conjunction with Ford, its previous owner.
Daimler will join a company jointly run by Investindustrial, an Italian private equity fund, and The Investment Dar, a Kuwaiti investment group, which bought the carmaker in 2007.
The agreement will enable Aston, which plans to announce its new chief executive to succeed Ulrich Bez in the first quarter of 2014, to avoid the huge costs associated with developing its own engines
Following the initial 4 per cent stake taken by Daimler, Investindustrial will own 36 per cent of Aston and a suite of Kuwaiti investment vehicles will own a total of 58.2 per cent. The remainder is held by individuals.
Investment Dar became overextended in the global financial crisis and underwent a long and complex debt restructuring, which has sapped its appetite for further investment into the carmaker.
Investindustrial, the Italian private equity group that won plaudits for its turnround and sale of Ducati, the superbike brand, took an initial 37.5 per cent stake in the carmaker last December.
Investindustrial, which bought Ducati in 2005 and sold it to the Volkswagen Group in 2012, is expected to be targeting a similar seven to 10-year turnround at Aston, with a possible exit through an initial public offering, one of the people said.
Aston, based in Gaydon, Warwickshire, and one of the last remaining independent luxury car brands, is currently in the middle of a five-year, €625m product plan investment to develop its new V8 and DB9 models, ahead of a targeted increase in sales to 7,000 by 2016 from 4,000 this year.