Mercedes increases stake in car manufacturer to 20% as it announces an expanded and enhanced technology agreement between the two companies.
While a consortium led by Lawrence Stroll bought the company earlier this year, it has continues to haemorrhage cash.
The deal, which sees Mercedes increase its stake from 5%, is targeted as seeing the car manufacturer producing 10,000 vehicles a year by 2024/2025, with revenues of £2bn and earnings of £500m.
According to Mercedes the deal will give Aston Martin access to a range of technologies, including powertrain architecture (for conventional, hybrid, and electric vehicles) and future oriented electric/electronic architecture, for all product launches through to 2027.
It removes the costs and risks associated with developing these technologies, thereby enabling Aston Martin to focus its investment in other areas and expand its product portfolio.
The Company will 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.
"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."
"We already have a successful technology partnership in place with Aston Martin that has benefited both companies," added Wolf-Dieter Kurz, Head of Product Strategy at Mercedes-Benz Cars. "With this new expanded partnership, we will be able to provide Aston Martin with access to new cutting-edge powertrain and software technologies and components, including next generation hybrid and electric drive systems.
"Access to this technology and these components will be provided in exchange for new shares in Aston Martin. These new shares will be issued to us in several stages, taking our shareholding up to a maximum of no more than 20.0% of the common equity. The supply arrangements for these new technologies will be on commercial terms. We look forward to continuing to work together with Aston Martin and we wish the company every success in its next stage of growth."