Aston Martin boss will get £31M-plus in ‘optimistic’ £5.1B float
Aston Martin’s boss will land more than £31 million ($53 million) if the company’s flotation prices at the top of the range, it announced Thursday.
The sports car manufacturer — made famous in James Bond movies — hopes to be valued at almost £5.1 billion ($8.7 billion) if it hits the top of the £17.50 to £22.50 per share spread revealed by documents for its London flotation.
On listing, chief executive Andy Palmer’s incentive scheme will crystallize, giving him a theoretical payout of £31 million and a 0.6-per-cent holding, though this is subject to a four-year lock-up.
The documents also state he will get a 20-per-cent pay rise when it floats, taking his base salary to £1.2 million. He will also be in line for a bonus of up to twice his pay and share awards of up to three times.
Palmer was parachuted in to Aston four years ago from Nissan and has overseen an impressive turnaround of the company.
Under his control the 105-yearold business has returned to profit and launched a swath of cars.
The chief executive’s “Second Century” plan also includes the introduction of its first sport utility vehicle, the DBX, as well as electric drive trains, and lucrative limited-edition models such as the £2-million-plus Valkyrie.
The valuation is “a big vote of confidence,” said Palmer. “Most important from my point of view is that we are only halfway down the runway. We renewed the existing portfolio and we have a lot in front of us.”
The company ’s first SUV is coming out in 2020, giving it access to the Chinese market and a head start over Ferrari, which this week postponed its Purosangue SUV to 2022, Palmer said.
Luxury carmakers are crowding into sport utility vehicles to capture high profit margins that will fund initiatives such as electrification.
If Aston prices at the top of the range, the business will be worth 10 times the amount its private equity backers paid for it when they acquired it from Ford in 2007.
A 25-per-cent stake in Aston equating to about 57 million shares - is being sold by existing shareholders, including Investindustrial, Adeem Investments, Primewagon and senior management.
Germany’s Daimler will remain a stakeholder and convert its current non-voting stake of 4.9 per cent to shares.
Even if it prices at the middle of the range, the float — one of the largest in London for years — is likely to see it enter the FTSE 100 index. It would be the first carmaker in the top tier since Jaguar was taken private in 1990.
However, there are questions about whether Aston — which will trade under the ticker AML — is worth such a price.
Prof. David Bailey, of Britain’s Aston University, called the target “optimistic”.
“The multiple is higher than Ferrari — which is more profitable — and it doesn’t take into account Aston’s debt or need to spend on R&D,” he said.
Italian supercar company Ferrari floated three years ago with a US$10 billion valuation, when it was producing over 7,500 cars a year and generating net profit of 290 million euros ($440 million) on revenues of 2.8 billion euros ($4.3 billion). By contrast, in its last financial year Aston made annual revenues of £876 million ($1.5 billion) and a pre-tax profit of £87 million ($149 million).
“We love the brand. We respect the management team. But we simply can’t see how a Ferrari multiple looks realistic,” Max Warburton, an analyst at Sanford C. Bernstein & Co., said in a research note. “They are selling a business that is loss-making on a U.S. GAAP basis, with a weak profitability record and a fragile balance sheet, selling cars at much lower price points, to a much less dedicated audience.” The Daily Telegraph
With files from Bloomberg