Aston Martin jumped 14% as investors gave perhaps a slightly guarded response to the news that Chinese carmaker Geely is upping its stake to 17%.
Geely has made a hefty commitment, investing £234mln in total through a combination of £95mln in new money and the purchase of a chunk of the stake held by chairman Lawrence Stroll’s consortium Yew Tree.
It is also paying 335p per share, a 28% premium to the current share price and even more compared to yesterday’s close of 231p.
Cracking China seems to be the rationale behind the deal, but it also reflects a marked upturn in the fortunes of the luxury car maker.
Russ Mould, investment director at AJ Bell notes: “Aston Martin has been targeting the Asian market for some time, knowing there is great appeal in the region for its products and British heritage in general.
“It has recently talked about China and Japan as being ‘rapidly expanding’ markets for luxury cars. Asia Pacific accounted for £353.5 million of the car maker’s revenue in 2022, equal to a quarter of group sales.
“The British group will no doubt have its eye on tapping into Geely’s connections to get the best price on components and to better understand how to market to the Chinese consumer.
“For Geely, it wants to dominate the automotive industry and owning a slice of Aston Martin is another step towards achieving its goal. It is also likely to work with Aston Martin to see if it can take any learnings away from how the British cars perform.”
Shares were up 35p at 266p at lunchtime.