Wolff Takes Bite of Aston Martin

Wolff Takes Bite of Aston Martin

Mercedes F1 boss Toto Wolff is expanding his motoring portfolio with a stake in Aston Martin.

Wolff, a one-time shareholder in the Williams F1 team, has made the move along with Racing Point boss Lawrence Stroll, father of Lance.

Stroll recently took a controlling interest in the Aston Martin road car business and the move by Wolf is not unexpected as he and Stroll are close friends and spend much of their leisure time at grands prix together.

It seems Stroll has now convinced Wolff that it is worth investing in part of Aston Martin, which means that Stroll and his fellow investors will have less risk.

This is not a bad idea as when Stroll agreed to invest in the company the shares were worth a great deal more than they are today. He has since renegotiated the terms of the deal to increase his shareholding to 25 percent for an investment of just $340million, which values the company at $1.36 billion.

The share price has fallen again since then and is now trading at 54 pence ($1.06), leaving Wolff with a shareholding of 0.95 percent, for which he will have paid around $14.3 million.

Switzerland’s richest man, Ernesto Bertarelli, has bought a similar shareholding, although this is slightly smaller than Wolff’s investment.

Both sets of shares were acquired from Stroll’s consortium, Yew Tree Overseas Limited, but as both men are Stroll allies it means that the consortium still controls 25 percent of the business.

Given that a year ago the company had a share value of more than six times what it is today, Wolff hopes that Aston Martin will bounce back in the longer term and he will make many multiples of the money invested. There is a risk involved, but Stroll’s refinancing plan seems to have given the company the money it needs to move forward on critical cars led by the breakthrough DBX SUV once the coronavirus crisis is over.

Wolff’s Aston investment was done through a nominee company to avoid any conflict of interest with his investment in Mercedes F1. He may well have borrowed the money for the investment, perhaps using his 30 percent shareholding in Mercedes as security, so the risk involved is much reduced and he stands to gain a great deal while also supporting his pal.

Mercedes has made it clear that it has no problem with the investment, which is not a great surprise given that it also owns a share in Aston Martin, and has a say in who can control the company. That deal was done some years ago when Aston Martin needed an engine supply and Mercedes has delivered the AMG V8 turbocharged motor.

The Mercedes F1 team has been keen to point out that the deal is a private one and will have no effect on Wolff’s executive role.

There continued to be stories suggesting that Mercedes will be withdrawing from Formula 1 – without much real supporting evidence. The F1 team is busy trying to make itself cash-neutral for parent Daimler AG, so that it will cost the manufacturer nothing.