29th Sep 2023 12:18
(Alliance News) - Shares in Aston Martin Lagonda Global Holdings PLC were on the up on Friday, as the investment vehicle of its executive chair increased its stake to just below the mandatory takeover offer trigger.
Aston Martin jumped 13% to 294.60 pence each in London on Friday around midday. The wider FTSE 250 index was up just 1.1%. In the year-to-date, the motor stock has surged 90%, whilst in the last 12 months the shares have more than doubled from 119.50p.
The stocks rose after the Yew Tree Consortium agreed to purchase an additional 26 million shares in the company.
This increased Yew Tree's total stake in the Gaydon, England-based luxury car manufacturer to 26.2% from 23.0%.
Yew Tree is the investment vehicle of Aston Martin Executive Chair Lawrence Stroll.
Other major shareholders in Aston Martin include Saudi Arabia's Public Investment Fund, China's Geely International (Hong Kong) Ltd, and Germany's Mercedes-Benz Group AG.
"When an investor already owning more than 20% of a business increases their stake, it sends a major signal to the market that something big could happen, said AJ Bell's Russ Mould.
"It could mean one of three things: either they intend to make a takeover bid at some point in the future, trading is going very well so they believe the company will soon be worth a lot more, or the shares are stuck in the mud and they see an opportunity to buy more of them while the market isn't interested."
Under UK takeover rules, a shareholder with a 30% stake has to make a takeover offer for the entire company.
Mould thinks that Yew Tree's statement implies the stake building has been "driven by confidence in the business".
Likewise, Victoria Scholar, head of investment at interactive investor, said it "acts as a vote of confidence in the business".
Stroll said: "The Yew Tree Consortium is delighted to increase its ownership in the company by 3.27%. This additional investment demonstrates the Yew Tree Consortium's continuing confidence and belief in the future of Aston Martin. The company has delivered a major turnaround since the Yew Tree Consortium's initial investment three years ago."
Aston Martin is currently loss making.
In the first half of 2023, its pretax loss narrowed to GBP142.2 million from GBP285.4 million a year earlier, as revenue rose 25% to GBP677.4 million from GBP541.7 million.
By Sophie Rose, Alliance News reporter
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