Aston Martin shares rise after Stroll consortium increases stake
- Lawrence Stroll’s Yew Tree Consortium now has a total stake of 26.2%
- Aston Martin Lagonda shares still well below their IPO price
- Geely and the Public Investment Fund are also large investors in Aston Martin
Aston Martin Lagonda Stock soared on Friday after its largest shareholder increased its stake in the luxury brand.
Lawrence Stroll’s Yew Tree Consortium agreed to buy another 26 million shares of the company’s common stock, giving it a total stake of 26.23 percent.
Following the update, Aston Martin’s share price became the second-biggest gainer 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 soared on Friday after it was revealed that Lawrence Stroll’s Yew Tree Consortium had increased its stake in the carmaker.
However, they remain significantly below their IPO price as the automaker suffered a drop in sales and production cuts during the Covid-19 pandemic.
It has also been hit by supply chain issues delaying the delivery of vehicles to the Americas region and a series of poor financial results.
The Warwickshire-based company reported that pre-tax operating losses more than doubled to £527.7m in 2022, due in part to new product launches and rising debt and inventory costs.
But in its latest half-year results, Aston Martin revealed losses had been halved thanks to higher average selling prices and strong demand for its DBX707 sport utility vehicle and its limited edition V12 Vantage Roadster.
Stroll said the latest decision to increase the consortium’s stake was indicative of its “continued confidence and belief in the future of Aston Martin.”
He added: “We have rebuilt this iconic company, transforming it into an ultra-luxury brand, with a portfolio of highly desirable and high-performance automobiles.”
“This increased investment demonstrates our continued, long-term commitment to the company, our conviction for the future and the shareholder value the company will bring.”
The Canadian billionaire’s group first invested in the struggling company three years ago, when it bought a 16.7 per cent stake as part of a £500m rescue package.
Two years later, Chinese conglomerate Geely – owner of Volvo and Lotus cars – and Saudi Arabia’s sovereign wealth fund – the Public Investment Fund – joined in after Aston Martin launched a £653m capital raising with the objective of reducing its high debt and financing spending on electric vehicles.
Geely became the third-largest shareholder in May under a deal to supply technology and components to the automaker, sparking speculation it could attempt another takeover bid.
Russ Mould, chief investment officer at AJ Bell, said Yew Tree’s decision to increase its stake means it could be considering its own acquisition approach.
He wrote: ‘When an investor who already owns more than 20 per cent of a company increases his stake, it sends an important signal to the market that something big could happen.
“It could mean one of three things: either they intend to make a takeover bid at some point in the future, operations are going very well so they believe the company will soon be worth much more, or the stock is stuck in the mud”. and they see an opportunity to buy more while the market is not interested.’