MUMBAI, Nov 26 (Reuters) - Aston Martin, purveyors of fast
cars to a fictional British spy and to real-life billionaires,
could be partly owned by India's Mahindra and Mahindra
by the end of the week if the Mumbai tractor moguls have their
But much is unclear as the British maker of James Bond's
sports cars, its Kuwaiti owner and a rival Italian bidder keep
their own counsel. "There are a lot of moving parts here," a
person with direct knowledge of the matter told Reuters on
Monday, adding the Mahindras hoped to strike a deal this week.
The source told Reuters that an initial 40-percent stake
could rise to 50 percent for a total price unlikely to top $400
Kuwait's Investment Dar, which led a private acquisition of
the luxury brand from Ford in 2007, denied on Sunday that it was
reviewing two bids for 50 percent after sources said Mahindra
had outbid Italian investor InvestIndustrial.
The person familiar with the deal said on Monday, however,
that bidders were wrangling over issues on management control.
Analysts have said that Investment Dar, which went to the
market for a $1-billion debt restructuring last year after
buying Aston Martin for 479 million pounds, or $925 million at
the time, had been hoping to recoup what it had sunk into the
company - meaning a value for the firm of about $1 billion.
InvestIndustrial bid between 200 million and 250 million
pounds ($400 million) for a stake, a source had said earlier.
The company again declined comment on Monday.
An apparent lack of interest among major car makers, such as
BMW, Daimler or Toyota, may have left the way open for the likes
of InvestIndustrial, which bought and sold Italy's Ducati
high-end motorcycle brand in recent years, and Mahindra, the
world's biggest tractor maker, which has seen compatriots at
Tata Motor do well in buying Jaguar Land Rover four years ago.
TRACTORS AND JAMES BOND
Nonetheless, some analysts questioned the logic of linking
the Mahindra family to Aston Martin - though the 99-year-old
British firm had its heyday in the 1950s and 60s when owned by
another tractor man, Yorkshire magnate David Brown, founder of
the classic DB model line beloved of Agent 007.
"It's difficult to visualise a tractor and an Aston Martin
in the same garage," said Mads Kaiser, a Silkeborg,
Denmark-based fund manager with JI India Equity Fund, which owns
Mahindra shares in its $200-million Indian equities portfolio.
"The acquisition will broaden their portfolio but doesn't
add anything to their tractor or India portfolio."
Shares in Mahindra fell more than 3 percent on Monday.
Investors will be wary of the risk of "trophy acquisitions"
that a tempting, vanity brand like Aston Martin might pose. Its
machines have most lately been on display in the new James Bond
blockbuster "Skyfall", being promoted globally in recent weeks.
Movie fan Anand Mahindra, whose family company is one of
India's biggest businesses, studied film before going on to take
his MBA at Harvard and has plenty of cash at his disposal with a
corporate debt-to-equity ratio of 0.29 at the end of March.
But Ashvin Chotai, managing director of consulting firm
Intelligence Automotive Asia in London, said: "Aston Martin
technology is so far beyond anything that Mahindra is doing at
the moment that it's hard to see any synergies either way.
"The main thing Mahindra would bring to Aston Martin is
money and maybe resources. But they're not bringing a lot of
For Aston Martin, analysts say, sales of only 4,200 cars
last year and tight margins mean that a boost of investment
would be welcome to refresh its model range and, notably, build
new engines as new European Union emissions criteria loom ahead.
"We view this bid with caution as we believe the latter will
require significant investments in R&D and benefits of
technology transfer to M&M's product portfolio is questionable
given little similarity between portfolios," Indian brokerage
Edelweiss Securities said in a research note.
Costs including research and development and sales account
for about 25 percent of sales at Aston Martin, compared with
12-14 percent at luxury car rivals such as BMW, Jaguar
Land Rover and Daimler, a Barclays report said.
"Large investments could be required to expand product
portfolio and distribution reach," the report said.
One voice speaking up in favour of Mahindra was that of the
Unite trade union representing workers at Aston Martin.
"We are in favour of a deal that secures the future of the
company and injects capital," said Tim Parker, a regional
officer for the union. "We have doubts about private equity
because of the reputation the private equity industry has with
regards to cutting costs. We are more positive on the Indian
company which has a reputation and a stake in the industry."
Mahindra has had mixed success in its overseas forays. It
pulled the plug this year on plans to roll out a pickup truck in
the United States, although it has made progress turning around
Ssangyong Motor Co, a money-losing South Korean SUV
maker it bought for $460 million in March 2011.
It has been looking for acquisitions to expand its portfolio
and gain access to new markets. Earlier this year, it was
reported to be interested in buying at least part of Swedish
carmaker Saab Automobile, later bought by a consortium.
Shares in Mahindra ended down 3.35 percent on Monday to
close at 922.05 after hitting a record high earlier in the day.
The broader market closed 0.16 percent higher.