- Yew Tree boosts Aston Martin.
- Share price surges.
- Future prospects and investments.
Aston Martin Lagonda shares soared on Friday after the luxury brand’s largest shareholder increased its stake.
The Yew Tree Consortium, led by Lawrence Stroll, has agreed to acquire an additional 26 million ordinary shares in the company, increasing its total stake to 26.23 percent.
Aston Martin’s share price surged by 13.2 percent, or 34.4 pence, to 295.4 pence by early Friday afternoon, making it the second-largest gainer on the FTSE 250 index.
However, they remain significantly below their initial public offering price due to the automaker’s plummeting sales and production cutbacks caused by the Covid-19 pandemic.
Additionally, supply chain issues have affected the delivery of vehicles to the Americas, and a series of poor financial results have impacted the company.
In 2022, the Warwickshire-based company’s pre-tax operating losses more than doubled to £527.7 million, partly due to the introduction of new products and rising debt and inventory costs.
In its most recent half-year results, Aston Martin revealed that its losses were halved due to higher average selling prices and increased demand for its DBX707 sport utility vehicle and V12 Vantage Roadster limited edition.
Stroll stated that the latest decision to increase the consortium’s stake reflected its “continuing confidence and belief in Aston Martin’s future.”
He continued, “We have transformed this iconic company into an ultra-luxury brand with a lineup of highly desirable, performance-driven automobiles.”
This increased investment demonstrates our continued, long-term commitment to the company, our confidence in the company’s future, and the shareholder value that the company will generate.
Three years ago, the Canadian billionaire’s group purchased a 16.7% stake in the struggling company as part of a £500 million rescue package.
Two years later, Chinese conglomerate Geely – the owner of Volvo and Lotus automobiles – and Saudi Arabia’s sovereign investment fund – the Public Investment Fund – joined Aston Martin after it launched a £653 million capital raising with the goal of reducing its high debt pile and funding spending on electric vehicles.
Geely became the automaker’s third-largest shareholder in May following an agreement to supply technology and components, leading to rumors that it may attempt another takeover proposal.
AJ Bell’s investment director, Russ Mould, stated that the company is contemplating its own acquisition strategy in light of Yew Tree’s decision to increase its stake.
He wrote, “When an investor who already owns more than 20% of a company increases their stake, it conveys a major signal to the market that a significant event may occur.
It could mean one of three things: either they intend to make a takeover bid in the future, business is booming so they believe the company will soon be worth a lot more, or the shares are mired in mud and they see an opportunity to buy more of them while the market is uninterested.