Mercedes rescues Aston Martin with bigger stake, partnership

London

DAIMLER AG's Mercedes-Benz is increasing its stake in struggling luxury-carmaker Aston Martin Lagonda Global Holdings Plc as part of a series of moves by the British company to shore up its finances.

Mercedes will boost its shareholding to as much as 20 per cent in stages, the companies said while announcing an expanded technology partnership on Tuesday. Aston Martin and its subsidiaries will raise a total of about £1.3 billion (S$2.3 billion) through new bond and stock offerings and by refinancing existing debt.

Aston Martin has struggled in the two years since it went public with bloated inventory and poor sales of its core sports cars.

After Canadian billionaire Lawrence Stroll bailed out the automaker early this year, the company poached the head of Mercedes's high-performance AMG brand to be its new chief executive officer and potentially seek additional funding.

By expanding a tie-up with Daimler that started in 2013, Aston Martin will both repair its balance sheet and better position for the shift away from internal combustion engines.

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Mercedes will give its partner access to next-generation hybrid and electric powertrains and other components in exchange for new shares.

Daimler CEO Ola Kallenius told reporters earlier this month the company has no intention to acquire Aston Martin but said their technology partnership will remain in place.

He has stepped up efforts to eliminate costs across the organisation and channel funds toward hybrids and EVs, including for the AMG division.

Supplying electric-car technology to Aston Martin will help Mercedes generate additional economies of scale beyond its own product range. BLOOMBERG