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Posted: Mar. 12 2007,10:40 am |
Post # 7 |
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Ford Sells Aston Martin Unit to Group Led by Richards
By Bill Koenig and Will McSheehy
March 12 (Bloomberg) -- Ford Motor Co., seeking to raise cash after last year's record loss, will sell its profitable Aston Martin luxury sports-car unit for $848 million to investors led by U.K. auto-racing champion David Richards.
The transaction values Aston Martin, best known as James Bond's preferred car, at 479 million pounds ($925 million), and Ford will retain a $77 million stake. Richards, founder of U.K. race-car partsmaker Prodrive Ltd., will be joined in the investment by U.S. banker John Sinders and two Kuwait-based financial firms.
The sale ends a six-month search for a buyer and two decades of Ford control of U.K.-based Aston Martin. Ford bought its initial stake while on its way to posting a then-record 1987 profit. The Dearborn, Michigan, automaker lost $12.7 billion last year, the most in its 103-year history.
``Vehicle manufacturers are looking to focus their energies on their real strengths,'' said Michael Robinet, an analyst for CSM Worldwide Inc. in Farmington Hills, Michigan. Ford, the world's third-largest automaker behind General Motors Corp. and Toyota Motor Corp., ``is a mass-market vehicle manufacturer.''
The Kuwait investment companies are Adeem Investment KSC and Investment Dar Co.
Aston Chief Executive Officer Ulrich Bez, 63, who has led the company since 2000, said he's ``committed to run the company for another five years.'' Richards, 54, will be non-executive chairman.
Ford will hold a separate class of Aston preferred shares. That means Ford's stake in Aston Martin can't be stated as a percentage, spokeswoman Becky Sanch said in an interview. Ford said in a statement that it expects to complete the sale in the second quarter.
Shares, Bonds
Shares of Ford dropped 2 cents to $7.91 at 12:43 p.m. in New York Stock Exchange composite trading.
Ford's 7.45 percent bond due in July 2031 fell 1 cent on the dollar to $79.5 cents on the dollar on March 9, according to Trace, the bond-price reporting system of the NASD. The yield rose to 9.65 percent.
Aston Martin, with price tags starting at $110,000 for the Vantage coupe, accounts for less than 1 percent of Ford's global sales volume.
``The price is in line with our expectations,'' Ford Executive Vice President Lewis Booth said at a news conference today at Aston Martin headquarters in Gaydon.
``Any person looking at Aston Martin will want to boost its production,'' said Sheikh Maktoum Hasher Maktoum al-Maktoum, a member of Dubai's ruling family and founder of A1 Grand Prix, in a phone interview from the Persian Gulf emirate today. Sheikh Maktodsum said he is providing advice and support to Richards, a personal friend, and may also take a stake in Aston Martin himself.
Connections
``If I don't put money on the table myself, I have a lot of contacts who might,'' he said.
Aston Martin is planning to expand into new markets, including a Moscow dealership to open in June, Bez said.
Ford expanded its original 75 percent to full ownership in 1994. Aston cars started appearing in James Bond movies with 1964's ``Goldfinger'' and most recently in last year's ``Casino Royale.''
Ford put Aston Martin up for sale on Aug. 31, just before hiring former Boeing Co. executive Alan Mulally as its new CEO.
Booth declined to specify how much Ford has invested in Aston Martin the past 20 years. ``It's been extensive,'' he said.
IPO
The Richards group doesn't plan an initial public offering in Aston Martin ``in the near term,'' Sinders, one of the investors, said in an interview at Aston headquarters.
``But we think that Aston Martin would be a very attractive candidate,'' he said. ``We wouldn't rule it out in the long term.''
``The car business requires long-term investment,'' Richards said at the news conference.
Richards founded Prodrive in 1984. He also managed teams in the European-based Formula One racing series and in 2006 won the right to field his own team starting next year.
Ford signaled in January that it was nearing an end to its search for a buyer. Booth, in an interview at the Detroit auto show, said Ford was ``down to the short list'' of bidders.
The Richards investor group was advised by Jeffries Group Inc. and Casesa Shapiro Group LLC. UBS AG served as Ford's financial adviser.
Roots
Founded as Bamford and Martin Ltd. in 1913, the company took the name Aston Martin a year later following success in a competition called the Aston Hill Climb, according to the carmaker's Web site.
After industrialist David Brown took over the company in 1947, his initials became part of several model names, including the Aston Martin DB5, made famous in the 1964 James Bond film ``Goldfinger.''
Aston Martin built just 16,000 cars in its first 88 years, according to Edmunds.com. Under Ford, Aston Martin's production has risen from 46 in 1992 to about 7,000 annually. Ford has said the unit is profitable, without providing figures.
The car gained worldwide fame when author Ian Fleming placed British secret agent Bond behind the wheel.
Agent 007 drove an Aston Martin DB Mark III in Fleming's 1959 ``Goldfinger'' novel about a plot targeting the gold reserves at Fort Knox. In the book, Bond's car had modest modifications, including reinforced bumpers for ramming other vehicles and a hidden compartment for weapons.
Ejector Seat
By the time the screen version was made five years later, the centerpiece was an Aston Martin DB5 with an ejector seat, machine guns and tire-slashers.
Aston Martins appeared sporadically in other Bond movies, including 1965's ``Thunderball.'' That film also had a cameo by Ford's then-CEO, Henry Ford II.
Confidence in the creditworthiness of Ford was unchanged. Credit-default swap contracts based on 10 million euros of Ford bonds traded at 550,000 euros, according to RBS in London.
Aston Martin is the smallest-volume brand in the Premier Group, which includes Land Rover and Volvo in addition to Jaguar. Ford said in 2002 that the group would generate one-third of its automotive profit in five years. It hasn't come close.
Ford's Booth said two other U.K-based units of Premier, Jaguar and Land Rover, aren't for sale. ``If that changes, we'll let you know,'' he said.
The primary source of Ford's losses is the company's North American automotive unit, its largest auto operation. The company is closing plants and cutting jobs. Part of the automaker's cash drain stems from funding that restructuring plan.
Ford last year borrowed $23.4 billion to prepare for what it expects to be a $17 billion cash drain through 2009.
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