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october 28, 2020 - Mercedes-Benz

Mercedes-Benz AG and Aston Martin to expand technology partnership and shareholding

  • Mercedes-Benz AG and #astonmartin Lagonda to expand and enhance their existing technology #partnership.
  • Strategic Cooperation Agreement signed that will provide #astonmartin with access to new #mercedesbenz technologies and components.
  • Access to these new technologies and components will be provided in exchange for new shares in #astonmartin; the supply of these new technologies and components will be on agreed commercial terms.
  • New shares will be issued in several stages over the next 3 years, taking #mercedesbenz AG’s shareholding in #astonmartin up to a maximum of no more than 20.0%.

Mercedes-Benz AG and #astonmartin Lagonda Global Holdings plc (“Aston Martin”) have announced a new strategic technology agreement and an enhanced #partnership. The new agreement will see #mercedesbenz AG grant access to a range of advanced #mercedesbenz technologies, including next generation hybrid and electric powertrains, as well as other vehicle components and systems.

Access to these technologies will be granted in exchange for new shares in #astonmartin, issued in several stages over the next 3 years, up to a total value of GBP 286 million. #mercedesbenz AG’s current shareholding stands at 2.6% of Aston Martin’s common equity. The new shares to be issued will take #mercedesbenz AG’s holding up to a maximum of no more than 20.0%. #mercedesbenz AG has no intention to increase its holding in #astonmartin beyond this level.

Wolf-Dieter Kurz, Head of Product Strategy at #mercedesbenz Cars, commented: “We already have a successful technology #partnership in place with #astonmartin that has benefited both companies. With this new expanded #partnership we will be able to provide #astonmartin with access to new cutting-edge technologies and components, including next generation hybrid and electric drive systems. The supply arrangements for these new technologies will be on agreed commercial terms. We look forward to continuing to work together with #astonmartin and we wish the company every success in its next stage of growth.”

Background

In 2013, #mercedesbenz AG and #astonmartin entered into a strategic cooperation for the supply of AMG V8 engines and the supply of components for the E/E (electrical) architecture. In return, #mercedesbenz AG 

received an equity participation of 5% in #astonmartin. Following Aston Martin’s IPO in 2018 and various further financing rounds, #mercedesbenz AG now owns a 2.6% stake.

Key terms of the new agreement

During 2020, negotiations regarding the expansion of the existing cooperation were initiated. In a first step, #astonmartin requested access to certain engines and powertrains as well as powertrain software, E/E architecture and various other components. #mercedesbenz AG has agreed to provide such technology access to #astonmartin in exchange for additional new shares in #astonmartin, which will be allotted to #mercedesbenz AG by means of a Contribution in Kind (“CiK”). The arrangement will not involve any cash consideration from #mercedesbenz AG. The supply of the systems and components will be on arm’s length terms.

A total CiK value of GBP 286 million will be required to achieve the maximum agreed shareholding of 20.0% in #astonmartin. #mercedesbenz AG has no intention to increase its holding beyond this level. The new shares shall be issued to #mercedesbenz AG in several tranches by 2023, tied to the release of various technology packages.

The main terms and conditions for the first technology package and share tranche have already been agreed. The value for the Tranche 1 technology is GBP 140 million. The shares to be issued to #mercedesbenz AG in return for Tranche 1 technology will increase #mercedesbenz AG’s shareholding to 11.8%. For further tranches, the parties need to agree upon the scope of the technology to be made available to #astonmartin, the respective value (“entry fees”) and the piece prices of components and systems.

The planned continuation and enhancement of the cooperation with #astonmartin will result in further sales of components and systems for #mercedesbenz AG, as well as the potential upside of any increase in the value of the enlarged shareholding in #astonmartin.