Mahindra & Mahindra likely to strike Aston Martin deal this week - Economic Times

MUMBAI: The fate of iconic British carmaker Aston Martin is likely to be finalised this week with Mahindra & Mahindra (M&M) as the front-runner to become its strategic investor. M&M is poised to edge out Italian private equity fund Investindustrial, the other serious contender in the race, though negotiations are still on with Aston Martin's current shareholders and management, said sources aware of these talks. They spoke on condition of anonymity as they are still in the private domain. On Saturday, Bloomberg reported that M&M had bid higher than the Italian PE fund for a 50% stake. To start with M&M is likely to pick up a minority stake of around 40% but will have the option to raise this to 50%. The final shareholding structure is still being worked out. The three existing shareholders and the management team will retain the residual stake. The operations team too is unlikely to change even after M&M or another strategic partner comes in. The transaction may also see fresh equity being issued to M&M and based on the final structuring; M&M may have to shell out £120-200 million pounds for its strategic stake. Aston Martin is owned by a Kuwaiti consortium of financial sponsors led by Investment Dar who bought the luxury car company from Ford Motor in 2007 for £479 million. But the subsequent financial crisis affected the sales of sport cars and significantly stretched the Kuwaiti investors' financials. Last year, Investment Dar was forced to restructure its $3.7-billion debt. The enterprise value of Aston Martin expected to be a little over a billion dollars or £650-700 million. This includes a £300-million high yield bond issued last year. The Mahindra spokesperson refused to comment, while the mails sent to Investment Dar and Aston Martin did not elicit any response till the time of going to print. "The discussions are still fluid. Over the last one week and through this weekend it has picked up momentum and both sides continue to engage in serious negotiations. We are expecting the deal to get closed in the coming week," said one of the officials mentioned above. "It's not a competitive auction process like Jaguar Land Rover or Corus, but about a strategic partner coming on board. The contours are constantly changing but so far being Mahindra does seem to have an edge," he added. Being an auto player itself will certainly give M&M the advantage even though there may not be an outright synergy between the two portfolios. M&M is the world's largest tractor maker and is the leading SUV manufacturer in India. It also controls South Korean Ssangyong Motor Co Ltd, but lacks any luxury or sports cars in its portfolio. Insiders say the top management is keen to erase the image of a brand associated with cheap vehicles with the acquisition of Aston. However, Aston Martin does have a poor carbon footprint, warn analysts. From its Gaydon, Warwickshire, plant, Aston Martin makes predominantly two door sports coupes like Vanquish, Vantage, DB9 or DB5, many of which have spent cult screen presence in 11 James Bond films including the latest Skyfall. Download ET's mobile applications for iPad, iPhone, Android, BlackBerry, Nokia and Windows Phone to track news as it happens, live stock quotes, monitor portfolio, get market stats like gainers, losers and movers & much more. To check out free Economic Times apps , Click here Mahindra & Mahindra may shell out $190-320 million to pick up around 40% and will have option to hike stake to 50%. via Business - Google News

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