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Shares surge at Aston Martin on possible investment by Lotus owner Geely 

posted onJanuary 11, 2020
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Stocks in Aston Martin closed up 15.32%, the best performer in the FTSE 250 on Friday (Jan. 11), after the Financial Times reported that Chinese car maker Geely is considering an offer for a stake in the British luxury cars manufacturer. 

Geely is the owner of Volvo, Lotus, Polestar, the London EV Company and Geely's chairman, Li Shufu, is currently the biggest shareholder in Daimler with a 9.69 stake in German car maker. 

Despite the daily share increase, Aston Martin, the carmaker famed for kitting out James Bond, is in need of raising funds in the wake of falling sales  and a 80 per cent drop in its stock since floating in late 2018, with a valuation of around £4.5bn

Earlier this week, the Gaydon, Warwickshire-based firm issued an unexpected profit warning due to the continuation of challenging trading conditions. Revealing the firm sold 5819 cars in 2019, 7% down on 2018,  Dr Andy Palmer, President and Group CEO of Aston Martin Lagonda said the company suffered a "very disappointing year".

“The challenging trading conditions highlighted in November continued through the peak delivery period of December resulting in lower sales, higher selling costs and lower margins,” he said. 

The company said it was expecting earnings of between £130m and £140m, well below the £247.3m it reported last year.

“Whilst we are disappointed with trading performance in 2019, our focus is now on revitalising the business, launching DBX and ensuring profitable growth in the medium-term," added Palmer.

Aston Martin

DBX, is the company's first SUV and the carmaker hopes it will become its most popular model.  
The company plans to make up to 5,000 DBXs a year, priced at £158,000. 

Aston Martin also revealed that it “remains in discussions with potential strategic investors, which may or may not involve an equity investment into the company”. 

According to the FT, another keenly interested party is Canadian billionaire Lawrence Stroll. The father of Formula 1 driver Lance and owner of Formula 1 team Racing Point, is also weighing an investment of around £200m, which would leave him controlling almost 20-percent of the 107-year-old British sports car firm. 

Aston Martin

Existing Aston Martin shareholders include Kuwait-based Adeem/Primewagon which owns 
a 36 percent and Italian private equity fund Investindustrial, which has a 31 percent. Germany's Daimler,  also owns 4% of the firm - as well as supplying the carmaker with Mercedes-AMG engines. The rest is publicly held. 

There is no doubt the autos sector consolidates through deals. Will Aston resist to not belonging to a bigger automotive group?

ASTON MARTIN AT A GLANCE

Founded: London, 1913
Headquarters: Gaydon, Warwickshire, England, UK
Type: Public
Traded as: LSE:AML

GEELY AT A GLANCE

Founded: 1986, Taizhou, Zhejiang, China 
Headquarters: Hangzhou, Zhejiang, China
Type: Private