Aston Martin’s controlling shareholder, Investment Dar Co., has approached potential buyers for the maker of luxury sports cars featured in James Bond movies, said five people with knowledge of the matter.
The Kuwaiti company, which owns 64 percent of Gaydon, U.K.- based Aston Martin, has hired Rothschild to advise on the sale, said one of the people, who asked not to be identified because the talks are private. Mahindra & Mahindra Ltd. (MM), the Indian automaker, is among potential suitors Investment Dar has approached in recent few months, two of the people said.
A sale has proven difficult because investors haven’t been willing to match the price the Kuwaiti owner paid five years ago, said two of the people. Investment Dar has sought about $800 million for its stake, one person said.
For Kuwait’s Investment Dar, part of the group that bought Aston Martin for 503 million pounds ($805 million) in 2007, the proceeds would help the company pay off debt. A new backer for Aston Martin may help the maker of the 1.2-million-pound One-77 to develop cars that can challenge Volkswagen AG (VOW)’s Bentley and Fiat SpA (F)’s Ferrari.
“I don’t think you can truly compete without having the capabilities of a large car company behind you,” said John Wolkonowicz, an independent auto analyst. “There are very few examples of sustained success without it.”
A representative at Investment Dar who asked not to be named denied the company is seeking to sell Aston Martin.
Janette Green, director of brand communications at Aston Martin, said Investment Dar isn’t considering a sale. Requests for comment to Chairman David Richards were referred back to Green. Roma Balwani, a Mahindra spokeswoman in Mumbai, declined to comment on speculation.
Toyota Motor Corp. (TM), Asia’s largest carmaker, hired an auditor to conduct a one-week study on buying a stake in Aston Martin, according to a person familiar with the matter. The analysis, which was preliminary and carried out less than two months ago, hasn’t advanced to a full-blown evaluation, the person said. Shino Yamada, a Tokyo-based spokeswoman at Toyota (7203), declined to comment.
Investment Dar has reason to sell. The company agreed in February last year to reorganize 1.37 billion dinars ($4.9 billion) of debt after missing payment on an Islamic bond in May 2009. The restructuring is being implemented under Kuwait’s Financial Stability Law, enacted by the government in April 2009 to bolster financial institutions hurt by the credit crisis.
Before Investment Dar and Adeem Investment Co. became owners five years ago, Ford Motor Co. (F) had controlled the brand since 1987.
While Aston Martin still gets engines from Ford, it lost access to Ford’s other resources after the sale and remains the only global luxury brand that’s not part of a larger auto group.
That independence could be a handicap with the auto industry under pressure to develop technologies to improve fuel efficiency. Bayerische Motoren Werke AG is investing more than 1 billion euros ($1.3 billion) this year on making engines more efficient and developing electric vehicles. That sum exceeds Aston Martin’s 2011 revenue of 507 million pounds.
Large carmakers can help niche manufacturers stay competitive by spreading development costs across brands and models. Fiat owns Maserati and Alfa Romeo as well as Ferrari. VW completed the purchase of the Porsche car brand this year, adding the maker of the 911 alongside Audi, Bentley, Lamborghini and Bugatti.
VW uses the same platform to underpin the Lamborghini Gallardo and Audi’s R8, while the Bentley Continental Flying Spur and GT models share components with the VW Phaeton.
BMW, which owns the Rolls-Royce marque, plans to roll out the i3 electric car next year, as it adapts to demand for cleaner cars.
The extra yield investors demand to hold Aston Martin bonds maturing in July 2018 over similar maturity government debt has shrunk six percentage points this year to 12.5 percentage points as of Nov. 8, according to data compiled by Bloomberg.
The bulk of Aston Martin’s lineup consists of two-door coupes like the DB9, Vanquish and Vantage. It also offers the Cygnet city car, which is based on Toyota’s iQ. Aston Martin vehicles have been featured in 11 James Bond movies, including the vintage silver DB5 in the latest one, “Skyfall.”
The British carmaker’s adjusted earnings before interest taxes, depreciation and amortization last year fell 18 percent to 76.2 million pounds, with deliveries steady at about 4,200 vehicles.
The company’s factory in Gaydon, where Aston Martin makes most of its cars, is adjacent to an engineering facility for Tata Motors Ltd. (TTMT)’s Jaguar Land Rover.
By Siddharth Philip, David Welch and Jeffrey McCracken
Courtesy of Bloomberg News