Having been publicly rebuffed on its offer to invest in Aston Martin back in July, Geely has gone round the back by hoovering up shares on the open market to give it an almost 8% stake in the luxury firm.
So what happens now? Aston Martin chairman Lawrence Stroll made it extremely clear on the company’s second-quarter earnings call in July that he thought Geely’s £1.3 billion bid together with Italy’s InvestIndustrial Group for a stake in the company was derisory.
“The board and its bankers studied it and unanimously completely rejected it. It was a camouflaged backdoor offer disguised as a rights issue,” he said. “So the banks actually laughed. They thought it was quite astonishing.” It would be safe to say that Geely isn't Stroll’s favourite company, then.
And what about now? Geely went to the open market and bought shares, according to a source with knowledge of the situation. Or in other words, it was an unsolicited move to take a stake without Aston Martin’s blessing, which wasn't exactly going to improve Stroll’s mood.
Stroll tersely acknowledged Geely’s purchase at the very end of a statement announcing the completion of the £654 million equity capital raise, of which £200m has already gone to paying down some of Aston Martin’s heavy debt burden. “Finally, I would like to welcome Geely Holding, who have today announced that they have become a shareholder," Stroll said.
Geely’s statement was more fulsome about the possibilities that lie ahead between the two companies. “We believe that with our well-established track record and technology offerings, Geely Holding can contribute to Aston Martin’s future success,” said Daniel Donghui Li, Geely Holding Group CEO. “We look forward to exploring potential opportunities to engage and collaborate with Aston Martin.”
Geely’s move is on the surface very similar to the one that it engineered with Mercedes-Benz back in 2018, when Geely had announced that it had been buying shares in the German company on the open market to take its shareholding to just under 10%. The move spooked the German government so much that it noted it would remain “watchful” as to the Chinese company’s motives.
Geely however turned its Mercedes shareholding into a meaningful relationship with the company, culminating in it taking a 50% stake in the Smart brand and essentially moving it lock, stock and barrel to China.
Could Geely also bring Aston Martin on board? The British firm right now might not be the most receptive to overtures from a company that it sees as being an aggressor, but that might soften over time. Geely crucially has that link with Mercedes, which of course has its own stake in Aston Martin, now standing at 9.7% following the recent release of further shares.
Add your comment