Private equity firm Investindustrial seems to think it has spotted a real bargain in Marque sports car maker Aston Martin Lagonda (AML) at current depressed levels.
Through its Strategic European Investment Group arm, Investindustrial has today said that it is mulling buying an extra 3% of Aston Martin’s stock providing sellers are happy to take the £10 per share it is offering.
It appears they are, with a small group of institutional investors (Primewagon, Adeem Automotive and Asmar), happy to take the cash, confirming as much today.
STRANGE BEHAVIOUR
Two things should strike ordinary investors as odd about all of this.
First, Investindustrial was one of the big Aston Martin backers to bring the British car maker to the stock market last year, taking the opportunity then to sell a large slug of stock at the £19 per share initial public offer (IPO) price.
Yet it retained 31% of the shares. Private equity firms don’t usually hang on to stock market listed company stakes for too long so you would normally expect a gradual trickle of additional stock sales over time.
Which makes its (potential) plans to buy more stock seem at odds with typical private equity practice.
Given that the share price has collapsed from those £19 IPO highs to about £10 (the stock has been as low as 819p) perhaps they now see a bargain opportunity. Certainly not a prestige share price performance.
TAKEOVER RULES SEEMINGLY BYPASSED
Yet what is also surprising is that Investindustrial doesn’t seem to think that buying this extra stake will force it to bid for the entire business.
Under normal Takeover Panel rules, a single investor must launch a bid for all shares of a stock market listed business once its own stake nudges 30%.
Investindustrial was already above that threshold so, normally, you would expect UK takeover rules to trigger a full scale buyout offer.
Quite why this is not so is not immediately apparent, but it is clear from Aston Martin’s share price reaction today that investors do not anticipate a full blown bid.
Aston Martin shares have nudged 1.7% up to £10.224.
