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Canadian Tycoon Buys 17% of Aston Martin

Canadian-led group throws a lifeline to iconic British carmaker Aston Martin
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A Canadian-led group has agreed to a $308 million bailout for iconic British carmaker Aston Martin Lagonda.

Canadian tycoon Lawrence Stroll (Image: F1)

The deal will enable the company—best-known as the car of choice for fictional spy hero James Bond—to begin production of its first SUV, the $193,000 DBX, this spring.

Taking Charge

The two-part stock purchase will turn over an initial 16.7% stake in Aston Martin to a consortium led by Canadian billionaire Lawrence Stroll. The holding could grow to 20% through further stock purchases.

The initial investment will install Stroll as Aston Martin’s executive chairman. He made his fortune through investments in such luxury brands as Pierre Cardin, Tommy Hilfiger and Ralph Lauren. Stroll owns the Racing Point Formula One team (formerly Force India). His son Lance drives one of the team’s distinctive pink cars.

Starting with the 2021 season, Racing Point will become Aston Martin F1 and become the company’s factory team for at least 10 years.

Here We Go Again

Aston Martin is no stranger to financial drama. The boutique company has gone bankrupt seven times since its founding in 1913. In recent years it has struggled to keep pace with the costly demands of emission, safety and fuel economy regulations.

Aston Martin DBX crossover  (Image: Aston Martin)

The consortium’s investment will enable Aston Martin to get its ambitious product overhaul program back on track. The company had hoped to bankroll the effort through sales growth and the carmaker’s initial public offering in October 2018.

But neither source of funding has delivered. Aston Martin shares, which debuted at £19 ($25), have been in the dumps at about £6 ($8) since early July. That bargain price no doubt helped fuel Stroll’s interest in investing.

At the same time, swollen dealer inventories hurt wholesales and hiked marketing costs in 2019. Hopes of pushing factory sales to 7,300 evaporated as demand stalled at 6,400 units. The company has scrapped last year’s forecast for a record 10,000 sales in 2020.

Aston Martin CEO Andy Palmer says the company is slowing down its new-model plans regardless of the new investment. The debut of the next-generation Vanquish, a mid-engine grand touring coupe, has been delayed until at least 2022. Plans to relaunch the company’s Lagonda marque as a luxury sedan brand in 2022 won’t happen until at least 2025.

The company also has temporarily suspended production plans for its first all-electric car, the Rapide E sport sedan. The twin-motor, 610-hp car had been slated to go on sale this year.

Bottom Line

Stroll’s investment in Aston Martin doesn’t assure that the company’s financial woes are over. But his apparent long-term commitment to the company, coupled with a history of resuscitating luxury brands, is encouraging news for the resilient British brand.

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