Your eyes are not deceiving you, it’s true that Mercedes-Benz is acquiring a bigger stake in Aston Martin. While you might think that’s great for the German Automaker, Aston Martin is getting its share from the deal; in exchange, the British automaker is getting access to the latest and greatest hybrid systems and electric powertrains that Mercedes-Benz has to offer.
While proceedings are firmly in the limelight right now, it’s important to note that this merger has been a slow build and not a sudden power grab. Keen readers will know that it all began in 2013 where Merc provided Aston with its AMG V8 engines.
It turns out the relationship goes even further than just technical components. Andy Palmer has since stepped down as CEO, a position which is now filled by former Mercedes-AMG CEO Tobias Moers – more recently, Formula 1 man Lawrence Stroll has acquired his fair share of the pie as well.
To put some numbers on the table, Mercedes-Benz originally had 2.6% of Aston Martin’s holding equity. The new shares issued to the German automaker will take its holdings up to a 20% maximum. As it’s simply a technical alliance, there are no plans to further increase holdings in Aston Martin after all is said and done.
“We already have a successful technology partnership in place with Aston Martin that has benefited both companies,” said Wolf-Dieter Kurz, Head of Product Strategy at Mercedes-Benz cars. “With this new expanded partnership, we will be able to provide Aston Martin with access to new cutting-edge technologies and components, including next-generation hybrid and electric drive systems.”
A total value of $373 million (£286 million) will be required to achieve the maximum agreed shareholding of 20%. As such, the new shares will be issued in several tranches by 2023 which will be tied to the release of technology packages. Details remain sparse, but the future looks very exciting for Aston Martin on the road and the race track.
Mercedes-Benz AG and Aston Martin Lagonda to expand and enhance their existing technology partnership.
Strategic Cooperation Agreement signed that will provide Aston Martin with access to new Mercedes-Benz technologies and components.
Access to these new technologies and components will be provided in exchange for new shares in Aston Martin; the supply of these new technologies and components will be on agreed commercial terms.
New shares will be issued in several stages over the next 3 years, taking Mercedes-Benz AG’s shareholding in Aston Martin up to a maximum of no more than 20.0%.
Stuttgart (Germany) - Mercedes-Benz AG and Aston Martin Lagonda Global Holdings plc (“Aston Martin”) have announced a new strategic technology agreement and an enhanced partnership. The new agreement will see Mercedes-Benz AG grant access to a range of advanced Mercedes-Benz technologies, including next generation hybrid and electric powertrains, as well as other vehicle components and systems.
Access to these technologies will be granted in exchange for new shares in Aston Martin, issued in several stages over the next 3 years, up to a total value of GBP 286 million. Mercedes-Benz AG’s current shareholding stands at 2.6% of Aston Martin’s common equity. The new shares to be issued will take Mercedes-Benz AG’s holding up to a maximum of no more than 20.0%. Mercedes-Benz AG has no intention to increase its holding in Aston Martin beyond this level.
Wolf-Dieter Kurz, Head of Product Strategy at Mercedes-Benz Cars, commented: “We already have a successful technology partnership in place with Aston Martin that has benefited both companies. With this new expanded partnership we will be able to provide Aston Martin with access to new cutting-edge technologies and components, including next generation hybrid and electric drive systems. The supply arrangements for these new technologies will be on agreed commercial terms. We look forward to continuing to work together with Aston Martin and we wish the company every success in its next stage of growth.”
In 2013, Mercedes-Benz AG and Aston Martin entered into a strategic cooperation for the supply of AMG V8 engines and the supply of components for the E/E (electrical) architecture. In return, Mercedes-Benz AG received an equity participation of 5% in Aston Martin. Following Aston Martin’s IPO in 2018 and various further financing rounds, Mercedes-Benz AG now owns a 2.6% stake.
Key terms of the new agreement
During 2020, negotiations regarding the expansion of the existing cooperation were initiated. In a first step, Aston Martin requested access to certain engines and powertrains as well as powertrain software, E/E architecture and various other components. Mercedes-Benz AG has agreed to provide such technology access to Aston Martin in exchange for additional new shares in Aston Martin, which will be allotted to Mercedes-Benz AG by means of a Contribution in Kind (“CiK”). The arrangement will not involve any cash consideration from Mercedes-Benz AG. The supply of the systems and components will be on arm’s length terms
A total CiK value of GBP 286 million will be required to achieve the maximum agreed shareholding of 20.0% in Aston Martin. Mercedes-Benz AG has no intention to increase its holding beyond this level. The new shares shall be issued to Mercedes-Benz AG in several tranches by 2023, tied to the release of various technology packages.
The main terms and conditions for the first technology package and share tranche have already been agreed. The value for the Tranche 1 technology is GBP 140 million. The shares to be issued to Mercedes-Benz AG in return for Tranche 1 technology will increase Mercedes-Benz AG’s shareholding to 11.8%. For further tranches, the parties need to agree upon the scope of the technology to be made available to Aston Martin, the respective value (“entry fees”) and the piece prices of components and systems.
The planned continuation and enhancement of the cooperation with Aston Martin will result in further sales of components and systems for Mercedes-Benz AG, as well as the potential upside of any increase in the value of the enlarged shareholding in Aston Martin.
Additional information will be available at: https://media.mercedes-benz.com/mbsu