March 6, 2018 / 2:56 PM / in 8 months

Aston Martin says failure to agree Brexit transition could delay sale

GENEVA (Reuters) - Aston Martin’s market window for a sale or stock market listing may close for at least another year if no deal is reached on a Brexit transition period, the British sports car maker’s chief executive told Reuters.

FILE PHOTO: Andy Palmer, CEO of Aston Martin, poses for a photograph next to the company's new Vantage car in Gaydon, Britain November 20, 2017. REUTERS/Phil Noble

The luxury automaker, soon to add SUVs and electric vehicles (EVs) to its James Bond-endorsed sports cars, has said it is looking at a possible IPO or sale to an industrial bidder as its private equity owners move toward the exit.

Brexit has added a layer of unpredictability, CEO Andy Palmer said, as British Prime Minister Theresa May prepares to for a March 22-23 summit at which EU leaders are expected to decide on transition arrangements to follow the country’s formal departure from the bloc just over a year later.

“When you’re going through any kind of sale or IPO what you’re looking for is market stability,” Palmer said in an interview ahead of the Geneva auto show, which opened to the media on Tuesday.

“If you’ve got a transition agreement, to some extent you push out the problem by a couple of years,” Palmer said. Otherwise, he added, “you have to wait until Brexit has happened (in March 2019) and evaluate what kind of effect it’s had.”

But he added: “We believe on the basis of what we hear from the politicians that a transition period is quite likely.”

Aston Martin’s owners, Italian private equity fund Investindustrial and a group of Kuwaiti investors, have hired Lazard to prepare for a stock market listing or sale that could value the carmaker at between 2 and 3 billion pounds ($2.8-$4.2 billion), sources told Reuters in December.

The company has since delivered its first annual pretax profit since 2010 after sales reached a nine-year high.

“I could show you other sources that say 5-6 billion pounds,” Palmer said in the interview, referring to valuations based on discounted cashflow models.

The shareholders’ sale plans contributed to Aston’s decision to go public now with its intention to relaunch the Lagonda brand as an electric car maker in 2021-22, Palmer also said.

“When we talk to the financial markets, normally question two or three is, ‘What’s your EV strategy?’” the Aston boss said. “It’s always difficult to talk about things that are not in the public domain, so one of the reasons for getting it out there is to (answer) that question.”

Palmer brushed aside a Monday news report that Aston Martin was lining up IPO pitches from investment banks this month and preparing to recruit an independent chairman.

“We haven’t started any search for an independent chairman,” he said. “I have no meetings booked for pitches.”

Reporting by Laurence Frost; Editing by Mark Potter

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