Aston Martin Shareholder Yew Tree Increases Stake, Fueling Speculation of Tie-Up
Aston Martin, the iconic British luxury car manufacturer, has seen its shareholder Yew Tree increase its stake to over a quarter, defying a promise made to Geely and sparking speculation of a potential partnership with another car maker. The Yew Tree consortium, led by billionaire chairman Lawrence Stroll, announced last Friday that it had purchased an additional 3.27% stake in Aston Martin, bringing its total shareholding to 26.23%.
This move by Yew Tree breaks an agreement made with Geely earlier this year, when the Chinese giant increased its stake in Aston Martin by 17%. As part of the agreement, Yew Tree had promised not to increase its stake beyond 25% until August 2024, while Geely committed to keeping its stake below 22%. However, the agreement allowed for the clause to be broken if the company directors agreed on an offer or if a firm offer for the company was announced.
The breaking of this clause has led to speculation of potential new investment by another car maker. Investment bank Jefferies suggested that this move hints at possible mergers and acquisitions interest around Aston Martin. Analyst Philippe Houchois stated, “The near-term implications are unclear, but maintain expectations of mergers-and-acquisition interest around Aston Martin.”
Aston Martin, however, refrained from commenting on the agreements between shareholders but stated that it understood all relevant consents were obtained prior to the additional investment being made. The company is part-owned by Geely (17%), Mercedes-Benz (9%), Lucid (3.7%), and Saudi Arabia’s Public Investment Fund, which also has a stake in Lucid.
Impact on Aston Martin Share Price
Following the news of Yew Tree’s increased stake, Aston Martin’s share price jumped 13% to 296p. However, as of Tuesday afternoon, the share price has fallen back to 275p. This fluctuation in share price reflects the uncertainty surrounding the implications of Yew Tree’s move.
Aston Martin’s shares have rebounded in the longer term, recovering from below £1 this time last year. The company has been implementing a turnaround strategy, including raising the prices of its models, in an effort to achieve sustainable profitability. Deliveries of new models, such as the highly anticipated DB12, are expected to contribute to a better finish to the year for Aston Martin.
Jefferies has predicted a third-quarter loss of around £27 million for Aston Martin but remains optimistic about the company’s future prospects. The increased stake by Yew Tree and the potential for a tie-up with another car maker could provide the necessary boost for Aston Martin to continue its path towards profitability.
Conclusion
Yew Tree’s decision to increase its stake in Aston Martin beyond the agreed limit has raised eyebrows and fueled speculation about potential partnerships and investments in the luxury car manufacturer. While the immediate implications remain uncertain, industry analysts believe that this move could attract mergers and acquisitions interest in Aston Martin. As the company strives to achieve sustainable profitability, the increased stake by Yew Tree and the support of other shareholders will be crucial in shaping Aston Martin’s future.