Aston Martin (AML.UK) part-owner and investor billionaire Lawrence Stroll has increased his stake to block a possible takeover bid for Aston Martin by Chinese company Geely. Stroll and his investment group Yew Tree increased their stake to 28.29% after acquiring shares worth more than £50 million, up from 19% at the beginning of the year. Despite Stroll's belief in the superior fundamental value of Aston Martin, the shares are losing more than 5% today.
- The latest round of purchases from the Yew Tree consortium - which is led by Stroll - also includes a number of other investors including JCB's Anthony Bamford, Hong Kong billionaire Silas Chou and telecom billionaire John McCaw and Ernesto Bertarelli. The purchase offer came at a time when Aston Martin is struggling with unprecedented problems that have pushed the valuation of Aston Martin shares to £1.18 billion. Yew tree and Aston declined to respond to the media on the matter;
The company's shares were worth more than £40 in 2018; today their price is hovering around £1.7. According to Stroll's CEO, Geely wanted to acquire the company at a discount from fair value, after stock market valuations, which Yew Tree did not allow, seeing the carmaker's long-term upside potential. If Yew Tree's stake reached 29.99%, it would be required to make a mandatory bid to buy the remaining shares under the company's takeover law:
Speaking last month after Yew Tree began acquiring significant amounts of shares, CEO Stroll commented: "(...) we share a strong belief that Aston Martin is undervalued and that, despite recent supply chain challenges, it is well positioned to continue its growth trajectory in the ultra-luxury, high-performance automotive business. (...) Our shared belief in the company's medium- to long-term success stems from the strength of its order book, the exciting portfolio of new products to come to market, and the incredible global awareness of the Aston Martin brand."
- Consequently, the suggestion from automotive commentators is that Yew Tree has blocked an aggressive bid by Geely, currently the holder of 7.6% of the company's shares, from acquiring additional stakes as a potential basis for a low-priced takeover of the company;
- To recall, Geely acquired its stake in Aston for about £66 million earlier this year, when the British sports car maker was issuing additional shares to raise an additional £654 million in financing to pay down debt and reduce the company's interest burden. Already at the time of Geely's open-market share purchase, Stroll revealed that he and his fellow leaders at Aston Martin had rejected a £1.3 billion offer from the company's equity-linked Invest Industrial fund - formerly a significant Aston shareholder - describing it as a "camouflaged takeover bid for the company for low costs";
- Other major Aston Martin shareholders include the Saudi Public Investment Fund (18.7%) and Mercedes-Benz (9.7%). Geely, led by billionaire Li Shufu, also owns more than 10% of British sports car maker Lotus.
Aston Martin shares, D1 interval. Looking at the stock from a broader perspective, we can see a drawing saucer formation and increasingly higher lows, which may herald an attempt to reverse the downward trend and climb above the 200-session average, which runs at levels near psychological resistance, i.e. GBP 2.00 per share. Source: xStation5
