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, best known for making James Bond’s cars of choice, said it will raise a total of £500m 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 20 per cent stake in the business.
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 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.
Stroll is also set to join the company’s board as executive chairman, replacing 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.
“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 were up more than 20 per cent in lunchtime trading on Friday.
Russ Mould, investment director at AJ Bell, said: “Is luxury car-maker Aston Martin finally on to the road to recovery having been refuelled with this latest injection of funds?
“The news that Canadian billionaire Lawrence Stroll will acquire a big stake in the business, which in combination with a rights issue will give the company a £500m lifeline, is a reminder that the Aston Martin brand still has some value.
“Stroll is planning to use the Aston Martin name, with all its James Bond cachet, for his F1 team. This element of the transaction also implies a long-term commitment to the business.
“Having been no stranger to bankruptcy during its 106-year history, the company’s board will have been fully aware of the stakes following a disastrous 2019 which made a mockery of the company’s £4 billion valuation at IPO.
“Having secured some breathing space the firm will look to address its problems by limiting production to prioritise demand over supply and support prices, fully launching its SUV model DBX and slashing costs.
“Under the circumstances the departure of chair Penny Hughes was inevitable, with Stroll becoming executive chairman as a condition of his investment.
“Focus is now likely to fall on CEO Andy Palmer and whether he is the right man to have behind the wheel as Aston Martin looks to find another gear.
“The company itself acknowledges it will not be fully compliant with the UK Corporate Governance Code due to the composition of its board in the wake of today’s developments and it may come under increasing pressure on this issue over time.”
The release of the DBX luxury SUV is seen as one of the most important launches in the manufacturer’s history.