Aston Martin shares rise after Stroll’s consortium increases its stake
- Lawrence Stroll’s Yew Tree Consortium now holds a total stake of 26.2%
- Aston Martin Lagonda shares are still well below their initial public offering price
- Geely and the Public Investment Fund are also major investors in Aston Martin
Aston Martin Lagonda shares jumped on Friday after its largest shareholder increased its stake in the luxury brand.
Lawrence Stroll’s Yew Tree Consortium has agreed to purchase an additional 26 million common shares of the company, representing a total ownership interest of 26.23 percent.
Following the update, Aston Martin’s share price became the second highest riser on the FTSE 250, jumping 13.2 per cent, or 34.4p, to 295.4p early on Friday afternoon.
New investment: Aston Martin Lagonda shares jumped on Friday after news that Lawrence Stroll’s Yew Tree Consortium had increased its stake in the carmaker
However, they are still well below their stock market price as the car manufacturer suffered declines in sales and production cuts during the Covid-19 pandemic.
It was also hurt by supply chain issues that delayed delivery of vehicles to the Americas region and a series of poor financial results.
The Warwickshire-based company reported pre-tax operating losses more than doubled to £527.7 million in 2022, partly due to new product launches and rising debt and inventory costs.
But in its latest half-year results, Aston Martin reported that losses had halved thanks to higher average selling prices and strong demand for its limited-edition DBX707 sport utility vehicle and V12 Vantage Roadster.
Stroll said the recent decision to increase the consortium’s shareholding was a reflection of its “ongoing trust and belief in the future of Aston Martin.”
He added: “We have rebuilt this iconic company and transformed it into an ultra-luxury brand with a portfolio of highly desirable, performance-oriented cars.”
“This increased investment demonstrates our continued, long-term commitment to the company, our belief in the future and the shareholder value the company will deliver.”
The Canadian billionaire’s group first invested in the troubled company three years ago when it bought a 16.7 percent stake as part of a £500 million rescue package.
Two years later, Chinese conglomerate Geely – the owner of Volvo and Lotus cars – and Saudi Arabia’s sovereign wealth fund – the Public Investment Fund – came on board after Aston Martin launched a £653m capital raising to boost its high Reduce the mountain of debt to finance expenses for electric vehicles.
Geely became the third-largest shareholder in May as part of a deal to supply technology and components to the automaker, sparking speculation of a new takeover attempt.
Russ Mold, investment director at AJ Bell, said Yew Tree’s move to increase its stake meant the company could consider its own takeover approach.
He wrote: “When an investor who already owns more than 20 percent of a company increases their stake, it sends an important signal to the market that something big could be happening.”
“It could mean one of three things: either they intend to make a takeover offer at some point in the future, trading is going very well and they believe the company will soon be worth a lot more, or the shares are stuck in the mud.” And they see an opportunity to buy more of it while the market is not interested.”