M&M's bid for 40% in Aston Martin may beat Investindustrial's offer

Winner to also get 50% voting rights could be chosen as early as this weekend

Investment Dar Co, the owner of Aston Martin, had received competing bids from Mahindra & Mahindra (M&M) and London-based private-equity fund Investindustrial for half the sports-car maker, three people familiar with the matter said.

Investment Dar and other Kuwaiti investors who own UK-based Aston Martin might choose a winner as early as this weekend, said the people, asking not to be identified because the talks were private. The buyer would get the stake as part of a capital increase.

Investindustrial is said to have offered just under £250 million ($401 million). But, M&M then trumped the offer with a higher bid, they said.

INDIAN AUTO MAKERS’ GLOBAL SHOPPING CART

Mahindra & Mahindra

• 2010: M&M took over South Korean auto company, Ssangyong
   
• $483 million: Value of M&M’s acquisition of Ssangyong
   
• Rexton: M&M’s recent SUV offering from Ssangyong’s platform
   
• 8%: Ssangyong’s sales growth in the first six months of 2012 after M&M’s takeover

Tata Motors

• Path breaker: Tata Motors was the first Indian auto company to shop abroad
   
• 2007: It bought British firm Jaguar Land Rover
   
• $487 million: JLR’s profit in second quarter (up 77%) after initial slowdown
   
• $1.75 billion: The company’s planned investment in China to build a new car factory there
   
• Range Rover Evoque: JLR’s launch under the Tatas that has been a runaway hit in the emerging markets

A decision would mark the end of a months-long search by Investment Dar to find an investor for Aston Martin, the maker of luxury sports cars featured in James Bond movies, people familiar with the matter said earlier this month. For Investment Dar, part of the group that bought Aston Martin from Ford Motor Co for £503 million in 2007, the proceeds would help pay off debt.

The winning bidder would get 50 per cent voting rights and a 40 per cent equity stake. Investment Dar, the other Kuwaiti investors and Aston Martin management would retain the rest, one of the people said.

Officials at Investindustrial and Aston Martin declined to comment, while M&M and Investment Dar did not respond to requests for comment outside of regular business hours yesterday. The talks were reported earlier yesterday by Private Equity News.

Boosting volumes
A new backer for the iconic British brand may help the maker of the £1.2-million One-77 to boost volumes and develop cars that can challenge Volkswagen AG’s Bentley and Fiat SpA’s Ferrari. Investindustrial earlier this year sold Italian motorcycle maker Ducati Motor Holding SpA to Volkswagen AG’s Audi brand.

Investindustrial’s offer for Aston Martin included plans to use technology and car parts from AMG, the Mercedes-Benz unit that makes sports cars, said two of the people. The buyout firm would invest in Aston Martin’s existing models, and potentially add new vehicles, to attract buyers, they said.

An official at Daimler AG, which owns Mercedes, declined to comment.

Development spending
That independence could be a handicap with the auto industry under pressure to develop technologies to improve fuel efficiency. Bayerische Motoren Werke AG is investing more than Euro 1 billion ($1.3 billion) this year on making engines more efficient and developing electric vehicles. That sum exceeds Aston Martin’s 2011 revenue of £507 million.

The bulk of Aston Martin’s line-up consists of two-door coupes like the DB9, Vanquish and Vantage. It also offers the Cygnet city car, which is based on Toyota Motor’s iQ. Aston Martin vehicles have been featured in 11 James Bond movies, including the vintage silver DB5 in the latest one, “Skyfall.”

The British carmaker’s adjusted earnings before interest taxes, depreciation and amortisation last year fell 18 per cent to £76.2 million, with deliveries steady at about 4,200 vehicles.