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Business News/ Companies / News/  Daimler agrees to take 5% stake in Aston Martin
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Daimler agrees to take 5% stake in Aston Martin

Daimler's Mercedes-AMG high performance division will develop V8 engines for Aston Martin's upcoming next generation models

Aston Martin is the only global luxury-auto producer that doesn’t belong to a larger manufacturing group. Photo: APPremium
Aston Martin is the only global luxury-auto producer that doesn’t belong to a larger manufacturing group. Photo: AP

Berlin:Daimler AG will own as much as 5% of Aston Martin Lagonda Ltd as part of a deeper agreement to share technology with the British sportscar maker.

Daimler’s Mercedes-AMG high-performance division will develop V8 engines with the UK company for Aston Martin’s next-generation models, the manufacturers said on Thursday in a joint statement. The Stuttgart, Germany-based maker of Mercedes-Benz vehicles will receive shares without voting rights in the non-cash deal. The stake will rise as the cooperation develops.

“By taking a stake, Daimler is showing a commitment to work with Aston Martin long term," said Frank Biller, an analyst with LBBW in Stuttgart. “Aston Martin gets a strong partner, but the two need to be careful that they don’t end up competing with one another."

Aston Martin, the only global luxury-auto producer that doesn’t belong to a larger manufacturing group, is seeking to limit spending on new models as the maker of the €189,995 ($260,000) Rapide competes with Volkswagen AG’s Bentley and Fiat SpA’s Ferrari and Maserati. AMG makes the similarly priced Mercedes-Benz SLS gullwing supercar.

Daimler’s Mercedes-Benz brand ranks third in worldwide sales behind Bayerische Motoren Werke AG’s (BMW) namesake marque and Volkswagen’s Audi nameplate. The cooperation with the UK maker of cars featured in James Bond movies gives Daimler a toehold in the ultra-luxury segment after it shuttered the unprofitable Maybach brand in 2011.

Shares Rise

Daimler’s shares rose as much as 2.6% to €61.18 and were up 2.5% at 2:01pm in Frankfurt trading. The stock has surged 48% this year, valuing the company at €65.3 billion. Volkswagen’s Bentley has expanded its lineup into sportscars such as the Continental GT Speed to challenge Gaydon, England-based Aston Martin.

The VW division announced plans on 23 July to build the world’s most expensive sport-utility vehicle. BMW’s Rolls-Royce is also pushing into more performance-oriented models with the $234,000 Wraith coupe.

AMG, based in the Stuttgart suburb of Affalterbach, is known for handmade engines embossed with a signature badge of the technician who assembled it. The division makes the manufacturer’s most expensive cars. The all-electric version of the SLS supercar tops the scales costing €416,500.

Win-Win Deal

This agreement is a real win-win for both sides, Tobias Moers, head of Mercedes-AMG, said in the statement. Daimler will have observer status on Aston Martin’s board.

In addition to the engine agreement, the companies are in talks for Daimler to provide electronic components to Aston Martin and are investigating other areas of cooperation. Thurday’s agreement between the carmakers formalizes an initial accord from July.

Aston Martin laid out plans in January to invest £500 million ($819 million) over the next four years. The carmaker, which turned 100 this year and sold 3,800 vehicles in 2012, is backed by London-based Investindustrial, a private-equity fund whose previous assets include high-end motorcycle maker Ducati, which Audi bought last year. Bloomberg

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Published: 19 Dec 2013, 08:04 PM IST
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