Daimler has taken full control of the Mercedes Formula 1 team, by buying a 40 percent stake from Abu Dhabi sovereign wealth fund Aabar Investments for an undisclosed sum.
Aabar, which has been cutting its ties with Daimler, last month it sold its remaining 3 percent stake in the company. Mercedes and Aabar joined forces in F1 when the Abu Dhabi group bought nine percent of Daimler. Aabar also owns a percentage of Scuderia Toro Rosso, believed to be 40 percent with an option to acquire more at some point.
Aabar recently sold all of its Daimler stock and should have made a big profit because of the share price when the stake was bought and sold, but the firm booked a big loss and dumped some of its management. This odd situation is believed to have been caused by complicated derivative deals that went wrong, leaving the profits to be made by the investment banks who bought options on the shares that Aaabar had acquired.
A chance for Aabar to buy full control of Toro Rosso? Weren’t Red Bull told to find a buyer for them a few years ago?
Unless I’m missing something , I don’t understand the reason for this ( less it’s marketing ). It’s not like they’re going to bring any expertise to the team.
That must be a positive sign from Stuttgart. Bit of a morale boost for Lewis, very nicely timed for public consumption.
They better look after him over there. He’s sure a big boy now, but it’s been so totally obvious he worries he will be in a strange land. Niki has always been strange (I forget where it ran, but I remember a fair while ago my late biz partner giggling as he translated for me a story of Niki trying to insist he flew one of his Lauda Air planes because it was running late. Maybe a tall story, but fits with the eccentricity) and I haven’t read anyone yet suss exactly what Niki is on about lately, though theJudge13 caught my eye with strange, or at least not obviously logical goings on.
Can’t help but recall when I ran my business from a mansion flat, and my girl who was shacked up with me played hostess, and we had something of a continuous procession of all sorts in and out, the kitchen as a (often inebriated) waiting room. It was quickly identified as “The Wibbly Wobbly World of John and ——-”
Being odd or eccentric can work very well (it’s great, never having to worry that anyone competing can even try to suss out your non-existent plans) but anyone a bit buttoned down found it very hard to come to terms with.
I wonder if Lewis might find aspects of wibbly wobbliness around Niki that throw him a bit. Oh, not saying they are all over the place, but coming from Woking, it might be a eye opener.
At least he won’t have to deal with coming to a meeting to find me asleep in my suit and be told by my love of then to go out and not come back without bubbly. This self indulgent memory of self indulgence brought to you by the fact I have failed after a long effort to bring reason and logic to bear on a deal that matters. I guess whereas once I was Baron Münchhausen, I tried too hard in reaction to be a Horatio Jackson, and failed literally miserably. I used to refrain I was saving my sanity for later. I did. It was not as useful as you may think, in my field. Sometimes a pinch of the absurd or at least irreverent is most efficacious.
>>That must be a positive sign from Stuttgart. Bit of a morale boost for Lewis, very nicely timed for public consumption. <<
Quite the opposite, to shut down or sell the team they need no one else's concurrence now! The board in Stuttgart is now fully in control!
I guess. I had that on one deal when I cut out partners, even though they simply made no move to come to the table to get what they could have. People are not hysterical I am shutting all that down. Not the case. But you have a excellent point about how cutting free from any partners may really be read as taking your ball home, as opposed to you upping your stake. A very current observation in my work, and well spotted.
Now hysterical, not “not hysterical”. Horrible typo changed meaning. What I meant was I just got a bad reaction because I “in housed” a deal. But to clarify, I don’t think Aabar work much in the same markets, whilst who just got upset with me for closing out partnerships on a deal actually had skin in that game, something to loose. They don;t have to loose anything, but anyhow the sentiment and impression to perceived is very insightful as to how some things go. Nice call.
Basically the boys in the suits with expensive MBA’s at Aadar got it wrong, big time. Reuters has an easy to read explanation on what and how, with a little bit more detail than what Joe has posted.
http://uk.reuters.com/article/2012/10/15/uk-abudhabi-daimler-stake-idUKBRE89E0UW20121015
They must have taken up a derivative position that was way larger then their stock position, otherwise they should have made a nice profit (albeit it somewhat lower than if they had not entered into the derivatives). Obviously they had no good insight in what they were doing.
A similar affair happened here in the Netherlands recently, with a social housing corporation giving away 5 times its equity on same lame interest rate swap deal they did not understand.
Hi Joe – thanks for the article!
Do you have any insight as to why Aabar has been cutting its ties with Daimler?
All the best
Gareth
Because they were losing money on a complex derivative deal
The way the Middle East works is sometimes strange to the way we work. Take one of the 3 Sovereign Wealth funds of Dubai. They put in $2 Billion dollars as seed capital and then went on a spending spree, and bought up a lot of well known “trophy” assets. In the end the fund stood at $20 Billion, but the trophy asserts had all been “sweated”, there was really nothing left to take out of them. If sold, and who ever at this time might want to buy them, the word is they would only get $10 billion to $12 Billion at the very most. As you can see that leaves a massive shortfall. The assets just don’t produce enough income to cover all the debt, and Dubai has no oil. They are well and truly leveraged. But look at most of the big deals out of the Gulf region and they are pretty much all the same structure. They put in very little cash, and borrow the rest. There have been a number of cases where they have pulled off some amazing deals and super big profits, those we read & hear about, on the flip side we don’t read that much about the problem ones. There are lot’s of them. Good hunting grounds for deals.
As for F1, they have similar sort of investments in a few team, which are now looking questionable. Joe has more detail on where all these little investment are in the teams.
Concerning financial situation of different teams, any word on what the situation at Lotus is? I was expecting to hear an announcement of some kind of a sponsorship deal by someone with them during the weekend, but didn’t see anything (maybe I missed it?) and German newspapers are again writing how they need 70 million euros to be able to continue and engineers are looking for jobs at McLaren.
Any inside gossip on the matter?
The announcements planned were delayed because of paperwork.
Either the cheque or the contact wasn’t signed. I wonder which it was?
can be anything. So many deals are still in technical motion liker public takeovers, when announced, the public word has to come first. Private deals like this are pick and choose. I can;t spot any single obvious timing reason, but Lewis taking top step and having been nervous lately about this move, maybe they thought this was a good moment to send a signal. I each to defer to anyone who has any actual information, though, because any hunch I have is just a random guess.
Lewis have a huge challenge ahead for the next 3 years, no wonder mercedes is not keen to up the investment from next year…
I would guess then that Aaabar bought in Feb 2009 when Daimler announced a €1.5Bn quarterly loss and the SP fell to under €25. (It is now €36.3) Of course they may just be miffed that the Maybach is to be dropped from production. However Merc is now the current most profitable car company, at a time when only the top and bottom ends of the car market are still working, the mid range market is a disaster.
Does Red Bull still own part of Torro Rosso or were they forced to sell all of it?
Good riddance to Maybach. Honestly, a souped up S Class with bling has never been promoted so hard. They had a brief moment in the rap and hip hop spotlight through promos and some silly videos, but I’ve met some of that crowd (if you think hip hop or rap is a thing, it’s not, it’s a vast and very interesting diaspora) and those motors were laughed at. Funny, how they are finally making money, yet as far as I am aware, the cachet of owning a Benz is all but gone. I was heckled down my street last night, didn’t quite recognise him at first, but this really bright kid who used to drive me has grown up, and pulled over for a chat. Quite a shock, been a while, and lovely to see this kid as a man. He was in a Chrysler, which has some street cred around here. So he must have dropped his big lump 7 Series for that. That was a pleasant surprise. Made me feel really old, though! Not sure my pal is a bellweather for trends, but he’d not be seen dead in the wrong car, and out of many, not a single Merc, budget never a issue. (rebase all marketing projections for Bethnal Green incomes and Bangla culture!) So maybe it’s a fair guess that the Benz is selling into a stable culture now, and not a trendy one?
Hello J(oJ)
I have to say the way you twist these threads into your personal stories is both interesting and entertaining.
Earlier in the year I rarely understood your posts – perhaps they were too long – but I think I’m getting the hang of them now…
Hey BlackJackFan, well, maybe that’s because I am getting the hang of my own threads also!
I think there’s a abiding rule: Watch Your Context. But also for a long time I really was not comfortable in my own skin, especially with anything that’s a personal anecdote. Too easy to show too much on the internet, and most tricky being personal when on Joe’s personal blog. I hope I’m improving with effort and practise. Thank you for your kind words, I’m seriously pleased you enjoy. I’m just here for that and that alone. You made my day! ~ john
P.S. Are you a fan of Edward O Thorpe also? Black Jack was my cards of choice always.
Hi Joe, where does this leave Mercedes in terms of budget?
And are the rumours circulating about (Coke’s) Relentless energy drink entering F1 with substance?
Yes, but not with them. And it is not Relentless. It is Burn.
Who are the other 2 backers set to join Lotus Joe?
Lets wait and see.