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Italian firm buys stake in Aston Martin

Fri, 07 Dec 2012

The former owner of Italian motorcycle maker Ducati has bought a 37.5-percent stake in financially strapped British car maker Aston Martin. The move means future Astons could use modern drivelines and electric architectures from Mercedes-Benz's AMG division, insiders with knowledge of the deal suggest.

Private equity fund Investindustrial has signed a memorandum of understanding with current Aston Martin owner Investment Dar of Kuwait that will see it pay $240 million (150 million pounds) for the ownership stake.

In an announcement in London Friday, Investindustrial also confirmed plans to invest up to $800 million (500 million pounds) in new product development for Aston Martin over the next five years.

Investindustrial beat out a rival bid from Indian automaker Mahindra and Mahindra, which was thought to have offered a significantly greater injection of cash for Aston Martin. The Italian-based equity fund is thought to have brought a technical collaboration with Mercedes-Benz's AMG to the bargaining table.

The deal announcement did not detail a technical tie-up with Mercedes-Benz's performance off-shoot but insiders at AMG have revealed to Autoweek that discussions on a deal to provide engines, gearboxes and electric components to Aston Martin have taken place.

"They rang up and asked if they won the bid for Aston Martin would we be interested in being a technology partner," a high ranking AMG official said on speculation linking it with Investindustrial. He added: "We know these guys. They were behind Ducati and we had a marketing collaboration with them."

Investindustrial owned Ducati until earlier this year when it sold the company to Audi for $1.1 billion.

Among the components Aston Martin is rumored to be seeking from AMG is a new V12 gasoline engine to replace the aging Ford-developed unit used in the Vanquish. However, the proposed collaboration between AMG and Investindustrial appears to encompass a much wider range of engines, drivelines and electrical architectures.

"There is significant scope. It would be more than just drivelines. If you look at Aston Martin products today, it is clear that they need not only new drivelines with increased performance and improved emission capability but also electronic architectures as well," an AMG source revealed.

AMG produces twin-turbocharged 6.0-liter V12 and twin-turbocharged 5.5-liter V8 gasoline engines at its factory in Affalterbach near Stuttgart, Germany. It has also engineered a unique version of Mercedes-Benz's seven-speed 7G-Tronic automatic gearbox for its own lineup of performance models.

Under the deal, Investindustrial will become a shareholder alongside Investment Dar.

Aston Martin chairman David Richards said: "I am delighted that Investindustrial has decided to become a major investor in Aston Martin. With the support of Investment Dar, we have made substantial progress over the past five years in laying the foundations for success as one of the world's leading luxury sports car manufacturers.

"Investindustrial's new investment reflects and sustains the unique position of Aston Martin within the industry. With this partnership and the continued commitment of Investment Dar, we look forward to working with our shareholders as we realize our vision and exciting future plans."

Andrea Bonomi senior principal at Investindustrial, said: "We are looking forward to working with the management and Investment Dar to achieve a similar transformation and rejuvenation that we achieved with Ducati, by expanding the model range and strengthening the dealership network, throughout the world."

By Greg Kable