ESPNF1:
Racing Point to become Aston Martin in 2021
31 Jan, 2020
Canadian billionaire Lawrence Stroll has agreed to buy up to 20% of Aston Martin and rename his Racing Point Formula One team after the 107-year-old company.
The agreement, which was made on Friday, will see Racing Point become the Aston Martin F1 Works team from the 2021 season.
A decline in sales of Aston Martin's luxury sports cars since it floated on the London Stock Exchange in October 2018 has put the company's shares and finances under sustained pressure, forcing it to seek help.
Aston Martin shares surged by as much as 30% after the announcement of the agreement and were 25% higher at 9:20 a.m. GMT.
Under the deal, Stroll will pay £182 million for a 16.7% stake, which could rise to 20% upon completion of the company's plan, to raise a total of £500m, including a rights issue from exiting shareholders.
The brand, which is mainly owned by Italian and Kuwaiti private equity groups and is famed for being fictional secret agent James Bond's car of choice, has come late to the lucrative sports-utility vehicle (SUV) market and has struggled to keep up with rivals owned by major global carmakers.
Aston Martin also held talks with Chinese carmaker Geely, which makes Volvos, but it wanted to instigate more fundamental change than the plan outlined on Friday, a source said.
Aston Martin Chief Executive Andy Palmer said the consortium led by Stroll, whose son Lance drives for Racing Point's F1 team, will bring several benefits.
"He brings with him his experiences and access to his Formula One team," Palmer said.
"We've talked a lot in the past few years about wanting to be clearly rooted in luxury and obviously Mr Stroll knows an awful lot about luxury."
Stroll, who made his money through investing in fashion brands such as Tommy Hilfiger and Michael Kors, has been involved in F1 and motor racing for years and also owns Canada's Mont-Tremblant circuit in Quebec.
Carmakers of all sizes are using alliances, partnerships and mergers as ways to share the cost and challenge of meeting new emissions regulations, electrifying model ranges and competing on new technologies such as autonomous driving. The sector has been hit by a decline in China and a slump in diesel sales in Europe, prompting several automakers to post disappointing results, but Aston has also suffered as a small player.
Rivals such as Bentley and Rolls-Royce are part of bigger automotive groups, meaning they benefit from the larger cost and expertise sharing.
But despite more stringent emissions rules being enforced over the next few years, Aston said plans to invest in electric vehicles will now be delayed beyond 2025 as part of cost-cutting attempts.
"I look forward to working with the board and management team ... to continue to invest in the development of new models and technologies and to start to rebalance production to prioritise demand over supply," Stroll said.
Stroll will join Aston Martin's board as executive chairman, replacing Penny Hughes, who will step down.
The consortium, led by Stroll, is likely to include several other people such as JCB Chairman Anthony Bamford, entrepreneur Andre Desmarais, Michael de Picciotto, telecoms investor John McCaw and Hong Kong fashion sector investor Silas Chou, all of whom have worked with Stroll before.
Hm, I wonder what this all means for Red Bull?
