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Thu 5 Dec 2019 04:21 PM

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Aston Martin shares soar amid report of bid from F1 billionaire Lawrence Stroll

Kuwait-backed Aston Martin is grappling with sluggish sales and lower earnings after pegging future growth to the launch of its first sport-utility vehicle

Aston Martin shares soar amid report of bid from F1 billionaire Lawrence Stroll
Owner of Racing Point Lawrence Stroll walks in the Paddock followed by son Lance Stroll of Canada and Racing Point before the F1 Grand Prix of Bahrain at Bahrain International Circuit on March 31 2019 in Bahrain Bahrain Photo by Charles CoatesGetty Images

Canadian fashion billionaire Lawrence Stroll is planning a bid for luxury automaker Aston Martin Lagonda Global Holdings Plc, industry magazine Autocar reported.

Shares of Aston Martin jumped as much as 13% after Autocar said Stroll aimed to purchase a major stake that would give him control of the struggling UK company, without saying where it got the information. The bonds also gained.

Aston Martin is grappling with sluggish sales and lower earnings after pegging future growth to the launch of its first sport-utility vehicle, which won’t start deliveries until the middle of next year. The Gaydon, England-based group declined to comment, while Stroll couldn’t immediately be reached.

Stroll, who owns the Racing Point Formula One team, is worth in excess of 2 billion pounds ($2.6 billion) after investing in brands including Pierre Cardin, Ralph Lauren and Tommy Hilfiger, according to Autocar, which said it had investigated his plans for Aston Martin with RaceFans.net.

Aston Martin traded 12% higher at 563.8 pence as of 11:30 a.m. in London, paring the stock’s decline this year to 54% and valuing the company at 1.29 billion pounds.

The shares are still worth less than one-third of what they were when the carmaker went public in October 2018, making Aston Martin the worst performer new listing on London’s main market in more than two years.

About 36% of Aston Martin shares are currently traded, according to Bloomberg data. Private equity firms Investindustrial and Adeem control more than 60% of the stock, analysts at Bernstein said in a note last month.

With Aston battered by an industry downturn, weaker economies and uncertainty around Brexit, Chief Executive Officer Andy Palmer has said salvation lies in the $190,000 DBX SUV that the company recently launched in Beijing. The vehicle sits at the heart of a plan to more than double annual output to 14,000 autos by 2023.

Analysts have said the company may need to sell new stock to shore up its balance sheet in the meantime -- a path obstructed by a shareholder resolution in June that restricted management’s power to issue stock without approval. In a separate hurdle, a further $100 million of financing depends on the company securing 1,400 orders for the DBX by June.

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