Mercedes-Benz AG increases its stake in Aston Martin in exchange for electric tech

Mercedes-Benz AG and Aston Martin Lagonda Global Holdings plc have announced a new strategic technology agreement and an enhanced partnership. The new agreement will see Mercedes-Benz AG grant access to a range of advanced Mercedes-Benz technologies, including next generation hybrid and electric powertrains, as well as other vehicle components and systems.

Access to these technologies will be granted in exchange for new shares in Aston Martin, issued in several stages over the next 3 years, up to a total value of £286 million. This will take Mercedes-Benz AG’s shareholding from 2.6 per cent to 20 per cent in the next three years, making it one of the largest shareholders of the company.

The partnership with Mercedez-Benz is an expansion from the one first set up in 2013 and is one of the initiatives taken by the company to improve its future prospects.

Aston Martin also announced a new financing strategy to infuse cashflow into the bleeding company. The British car maker will raise a total of £1.3 billion ($1.7 billion) through bond and stock offerings, most of which will be used to refinance existing debt.

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“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,” commented Lawrence Stroll, Executive Chairman of Aston Martin Lagonda.

Aston Martin has struggled with cash flow and dealer-inventory pile ups since it became a public company in 2018. In January 2020, it received a 536 million-pound ($663 million) cash infusion from a consortium led by Canadian billionaire Lawrence Stroll. Stroll purchased 16.7 per cent share in the company and became the Executive Chairman in April 2020.

The pandemic further impacted the sports car maker’s finances. These new measures will help bring the company to steer its new business plans.

Tobias Moers, the former head of Daimler’s Mercedes-AMG performance division, joined Aston Martin as the new CEO on Aug. 1.

Aston Martin targets volumes of 10,000 units and revenue of £2 billion and £500 million of adjusted EBITDA by 2024/25. In the last six months they have reduced stock inventory by 1,400 units till date with 567 units in Q3.

“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,” added Stroll.

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