Aston Martin in purchase talks with Tata Motors - report

Aston Martin in purchase talks with Tata Motors - report

16/11/2012 in News, All News, Car Manufacturer News

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Jaguar Land Rover owner Tata Motors is reportedly in talks with Aston Martin about a potential buyout of the supercar brand.

A source has told the Birmingham Post that Tata is one of several potential buyers for Gaydon-based Aston Martin, alongside the likes of Toyota and Mahindra & Mahindra.

Speculation has been rife for more than a year that the Warwickshire firm is on the market but Aston Martin has continually scotched rumours and again this week claimed the company was “not for sale”.

But a flurry of reports have emerged in both financial and automotive media suggesting Kuwaiti firm Investment Dar, which owns 64 per cent of Aston Martin, wants to off-load its investment and has appointed Rothschild to help find a buyer.

A source close to Tata said that talks had taken place with Aston Martin executives, according to the Birmingham Post today.

He said “All sorts of companies are interested in potentially buying it and a deal is likely to happen in a few weeks.

“Supposedly they have had many offers. The names linked with them included Mahindra & Mahindra and there have also been some talks with Tata.

“A number of Chinese companies are interested as well.

“The Kuwaiti owners are on a buyer push and a sale is going to happen. It’s just a question of when.”

Investment Dar were the major investor in the group that bought Aston Martin and the consortium is believed to be keen to off-load its 64 per cent stake for around £500 million.

Some reports suggested Toyota had already conducted due diligence on the books at Aston Martin, which was bought by Investment Dar, David Richards, John Sinders and Kuwait-based Adeem Investment from Ford in 2007 for £479m.

Toyota worked Aston Martin to produce its Cygnet city car, based on the iQ.

But while the source said talks have taken place, Tata is not believed to be the front-runner.

Automotive expert David Bailey, Professor of International Business Strategy and Economics at Coventry University Business School said: “In terms of who would strategically be the best fit, Tata would be ideal in terms of a tie-up with Jaguar Land Rover. My preference would be for Tata and it would make for a powerful premium group of companies they could share technology across.”

Prof Bailey suggested Aston, which posted a pre-tax loss of £4.3m last year, was in some ways looking isolated and would benefit from the opportunities from being part of a larger group and could share components and platforms, particular between it and Jaguar.

The company returned production of its Rapide vehicle from Austria to Gaydon earlier this year, incurring a £2.8m hit in the process.

He said: “They do need a big owner. Aston Martin is going to struggle with the large costs of developing new models and either need a new partner or a new owner. I think it is a fantastic opportunity. This is still one of the coolest brands around and you could still do a lot with it.”

Aston Martin revealed significant growth in sales to the crucial Asian market in 2011, despite slipping into the red, after seeing sales to Asia increase by 48.5 per cent in 2011, to £66m.
 


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Aston Martin

The Aston Martin network has been relatively stable, despite dwindling UK sales as the recession took hold, with a handful of London sites as well as representation in Wales, Scotland, Northern Ireland and the Channel Islands.

News of a limited production run of the Lagonda saloon was tinged with disappointment with the announcement that it would be a Middle East-only model, although Aston’s market share in 2014 to date is matching its performance in 2013.

Daimler increased its stake in Aston Martin to 5% in August (from 4%), which will help fund the development of new models, while future engines are likely to be developed from AMG-designed motors.

Perhaps the big question is if (or when) Daimler will decide to buy out Aston Martin. Analysts suggest it’s not an immediate priority for the German giant, but could still be an ambition. Either way, it seems the future of the Aston Martin brand is secure.

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Comments (5)

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irishboy4 - 105 weeks ago

So if Indian companies can afford to purchase AM and have already purchased Jaguar/Land Rover and well as British Steel (Corrus, why is the British Goverment giving India $520 million dollars each year in foreign aid?

Anon123 - 105 weeks ago

@irishboy4 - You are correct, just to let u know - The Indian Govt initially (3-4 months back) made a statement to stop the foreign aid from UK, realising this David Cameron reciprocated with a recent statement / notification on the same. Thus the aid will be soon be stopped on behest of India's request.

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Anon 1985 - 105 weeks ago

Historically, Toyota's president and Mr Ulrich Betz, Aston Martins' Visionary, have a strong relationship. They both have that need for speed and have been seen exchanging pleasantries of=n the tracks. Toyota funds will benefit Aston's development, but will it be the right move, as the Toyota business condition must be struck hard with the series of recalls in the past year. But it will put them on par with the likes of VW. But would it not interfere with the Lexus Brands LFA and LF LC? However, an Aston Martin will fill the gap between the standard Lexus range and the super successful LFA. This as I understand was the development taken from Toyota's F1 stint - which was scrapped in 2009, crisis situation. The question remains is Toyota still in crisis? will they risk absorbing Aston's losses?

Tata have a strong record of turning around UK companies, their adjacent locations makes for a beneficial relationship. They also share much internal talent - Ian Callum for example. But do they have the development edge like Toyota? Toyota has made a massive turn around in the last 3 years?

Lets wait and see shall we?

Egg Chaser - 105 weeks ago

@Anon 1985 -
What would happen to Apprentices at Aston do you think? I guess they could merge them with JLR, but JLR already take on over 100 per year. Aston I believe only take on a handful per year! Hopefully they will be taken on by whoever buys.

Anon 1985 - 105 weeks ago

@Egg Chaser - No I wouldn't worry about the positions of the "lower levels" apprentices in AM are a totally different skills set to Jaguar - we are talking the difference between hand made and line manufactured. If a sale does go by I think it's an internal process, style of management, nice fat budget for development and different way of thinking internally. I would imagine that JLR and AM have similar ways of doing things from the days of Ford.

If you look at the Tata takeover, things changed, because the biggest issues internally were subcontracted to specialists.
AM needs a bigger budget, they managed the beautiful One-77 with a tight budget, so they know how to do, what they love to do.

With Toyota, I am sure there is a strong philosophy of working and styles of developments that can be shared between them.

If it is an Independent then who knows how things may change.

Things may just not change at all, there may be no sale!

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