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Investindustrial races off with Aston Martin shares

by Jonathan Braude  |  Published December 7, 2012 at 11:28 AM
The checkered flag waved for Italian private equity firm Investindustrial Holdings SA, Friday, Dec. 7, as it won the race for British luxury sports-car maker Aston Martin Lagonda Ltd., with an investment valuing the company at about $1.2 billion.

Investindustrial, which has agreed to put up £150 million ($240 million) for a 37.5% equity stake, finished the final lap alone, after Indian conglomerate Mahindra & Mahindra Ltd. dropped out of the competition.

The current owner, Kuwait's Investment Dar Co. KSCC, will retain the majority of the shares, but the deal also gives Investindustrial 50% of the votes, according to a person familiar with the situation, despite the wording of the Italian private equity firm's announcement that talks only of becoming "a major shareholder of the company with commensurate voting rights."

In separate statements Friday, Investindustrial and Aston Martin said the Gaydon, England-based carmaker plans to invest over £500 million in its new product and technology program over the next five years.

Investindustrial also pointed to its long involvement in both the motor industry and Aston Martin's own history, dating back to its investment in the 1990s in the U.K. gearbox engineering company David Brown (a former owner of Aston Martin, whose initials DB are still used on the company's DB models today).

Investindustrial also pointed to its acquisition of the premium sports motorcycle maker Ducati Motor Holdings SpA in 2006, which it turned into the most profitable company of its sector within five years.

"The recent and highly successful experience with Ducati enables Investindustrial to bring both capital and valuable sector knowledge to Aston Martin."

However, there was no further mention of a previously discussed technological partnership with Daimler AG's Mercedes Benz, which was at one point said to be likely to take a stake in Aston Martin alongside Investindustrial.

It had earlier been suggested that a partnership with the German company was a key advantage for the Italian investor over its Indian rival, which makes tractors and family cars, but has little experience in high-technology sports engines.

"The transaction was never contingent on the participation of Mercedes," said a source close to Investindustrial.

The person said Investindustrial remained in contact Mercedes, adding: "It could still happen."

However, both the Investindustrial source and a spokeswoman for Aston Martin said there had never been any specific talks with Mercedes over such a partnership.

Aston Martin is an essentially British institution famous for supplying cars to movie spy James Bond, but is still using Ford engines under a deal dating back to its previous ownership by Ford Motor Co.

Investindustrial is an arm of Switzerland- and Luxembourg-based BI InvestHoldings SA, and has been advised on its bid by JPMorgan Chase & Co. Its legal advice is from Dickson Minto WS and SJ Berwin LLP.

Tags: Aston Martin Lagonda Ltd. | Daimler AG | David Brown | Ducati Motor Holdings SpA | Investindustrial Holdings SA | Investment Dar Co. KSCC | Mahindra & Mahindra Ltd. | Mercedes Benz

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