On Apple and McLaren

So, Apple apparently wants to buy McLaren, in order to get its hands on automotive technology?

Now, here is a story that sounds possible. McLaren has some spectacular automotive technology and a company like Apple might be interested to get hold of this – if the company was seriously considering going into high-end automobile manufacturing. The problem is that Apple doesn’t appear to be going in that direction any longer. For several months now, Apple has been backing away from its earlier automobile project and people who had been employed on the secret project have now begun to be laid off. The intention now is to be a technology supplier rather than a manufacturer, with software going into the cars that will transform them into connected devices. Thus automotive technology is not what is required. It is more logical to do this and wait to see how the market develops and then perhaps use the Apple cash pile to buy the best option when the products are more developed. Apple can afford to buy any small car company without even blinking, but developing its own project makes no great sense as the automobile industry is not an easy market for any newcomer.

What gives this story some credibility is that it appeared in the Financial Times in London, one of the few sources that generally operates using old-style journalistic methods, making sure that the stories are correct and not speculative. The money markets like speculation, but they don’t like it in the financial media.

“McLaren is not in discussion with Apple about any potential investment,” was McLaren’s response to the story. This seems to be fairly clear. It looks like a denial, but it does not say “is not, and never has been” in discussion, which would have been a total denial. There have been rumours of Apple around F1 for several months and it could be that McLaren and Apple were talking at some point in the past. It is no secret that for the last two and a half years Ron Dennis has been looking for someone to buy out his partners in McLaren and thus regain control of the business. But then Apple would not be the perfect partner for him because Apple doesn’t do joint ventures. They don’t need to. They are the brand and they swallow up companies and use the acquired technologies. A deal to buy McLaren would kill the McLaren brand. And it is hard to imagine Dennis letting that happen. Such a deal might see the staff staying on, but Dennis would then have only influence, rather than control. So maybe McLaren and Apple were talking but, obviously, they no longer are. And no deal is happening. The Financial Times report seems to have come from Silicon Valley sources rather than from Woking, which might make sense if there are disgruntled ex-Apple folk wandering around with nothing much to do.

The story was, in any case, somewhat confused. McLaren Technology Group does not own the McLaren Automotive car company, or at least it owns only a very small percentage. The owners of the McLaren Technology Group do control McLaren Automotive, but the ownership structure is very different – and this is significant because overall control is not always the same. Having said that, if the money is good, the partners might sell both companies to a big player like Apple.

The story says that McLaren has expertise “that ranges from automotive engineering and on-board computer systems to novel chassis materials such as carbon fibre and aluminium”. This is true, but not in the single company, although the two firms do share the very flash Apple-esque headquarters in Woking.

The McLaren Technology Group, is a racing car manufacturer and a third party technical supplier. It is involved in marketing, it applies its technologies to other industries, it has a catering business and is involved in “corporate services”. It changed its name in January 2015 in order to draw attention to its diversified interests in high-technology company, involved in industries such as oil and gas, healthcare, pharmaceuticals, aviation and financial services.

McLaren Automotive is a stand-alone company and operates as a separate operation.

According to the last available filings 50 percent of the shares in McLaren Technology Group are owned by Bahrain Mumtalakat Holding, 25 percent by TAG Group (Mansour Ojjeh) and 25 percent by Ron Dennis. There used to be an agreement that Dennis and Ojjeh always voted together, which meant that the company was 50-50 between the original partners and the Bahrainis. The role of chairman rotated between the three parties and the chairman could vote as he wanted to vote. In other words, Ojjeh could vote against Dennis if he was chairman of the meeting and the vote was 50-50. This is believed to have been what happened some years ago and the two partners fell out. Whether this affected the voting agreements is unclear. However, an alliance between Ojjeh and the Bahrainis would create a 75-25 vote against Dennis.

The car company is very different. The last official filings reveal that McLaren Technology Group owns only 3.6 percent of McLaren Automotive. Bahrain owns 57 percent, Dennis and Ojjeh 11 percent each, with the remaining 21 percent owned by others, notably Singapore’s Peter Lim. Thus is order to get all the assets a purchase would need to be two purchases.

These kind of stories rarely appear without a good reason and the word is that there is an important McLaren board meeting coming that could change the face of the company once again. Rewind a couple of years to 2014 and you will recall that Martin Whitmarsh was ousted from his role as the boss of various parts of McLaren and Ron Dennis returned in an active executive role, after several years on the sidelines. As part of that agreement, Dennis was to find a way to buy control of the firm, by acquiring the shareholdings of his partners, or at least enough to get a controlling interest. Two and a half years later, that has still not happened and the word is that the shareholders have been getting impatient. They can change that structure and may be willing to do so. The problem, of course, is that McLaren without Ron Dennis is an odd concept, although to be fair there have been many car companies in history which carried the name of someone who had been removed from the ownership.

Time will tell what it all really means, but do not expect Apple to buy McLaren any time soon – if ever.

91 thoughts on “On Apple and McLaren

  1. All this seems like very small beer compared to the big story of the day – Formula E’s coup in getting a street race scheduled for New York next year. Wow! That’s one in the eye for the swaggering dinosaurs of F1. I’d love to have been a fly on the wall in Chevy Chase’s office when he heard the news!

    1. The formula E new york race looks exciting until you go on google street view and see where the track actually is. It’s like having a London Grand Prix in Hangar Lane.

      1. Doesnt look too bad to me. Of course it would be better if it was through Manhattan but thats never going to happen. Even Bernies now dead F1 circuit wasn’t going to go through Manhattan was it? – his circuit was the other side of the hudson I believe. The formula e circuit might actually have a better backdrop than bernies circuit was going to have as well.

      2. Nope, I live very near to the track. It’s going to be incredible. Red Hook is a great neighborhood. Where the track is makes perfect sense as it’s essentially a huge parking lot which is what you’re seeing in street view.

        Explore a little more on Google and you’ll see it’s a wonderful area. There’s also a brand new Tesla dealership one block from the track which has a nice synergy!

      3. Unless there is a huge and dramatic change in the camera angles and the sound recording management it will be just like all the other FE races. It could be anywhere, it doesn’t matter they all look exactly the same, the venue does not appear during the race, just high walls. The atmosphere that could have been used created by tyre and motor noise has so far been missing entirely from the tv production. Basically it could be a Scalextric race.

  2. Could it be that Apple want to commission Mclaren to be it’s developer of drive train components for a apple car incorporating it’s connectivity developments? This would be similar to the TAG deal in the 80s, plausible deniability of a McLaren Porche whilst still getting the benefit of the latters experience coupled with control over the details. Think getting a realistic installation for a F1 car, something Porche failed at when they tried to do it themselves.

  3. You say a deal with Apple would kill the McLaren brand, but Apple bought beats headphones and have allowed them to stay as their own branded entity. So there is precedence of letting McLaren stay on (with some nice apple logos on the f1 cars, no doubt)

    1. That seems to be the exception rather than the rule. Otherwise, Apple have a very long history of buying companies and swallowing them up into its own brand, and the original company name disappears. It was a crafty move with the Beats headphones. It’s a brand that young people are attracted to so maybe it made sense to let it maintain an identity of its own – though in my own opinion it’s the label and not the product that appears to be the attraction. I’ve tested a pair of these headphones, and compared with comparable good quality (but less expensive) headphones, the quality of the sound does appear to be, how shall I put this, left wanting……

      1. Compare a pair of Beats to a pair of Sennheisers or Bose at the same price. Really no comparison. I’m usually an Apple fan but Beats is a massive triumph of marketing over technology.

        1. Ron Dennis needs to design and brand some headphones to McLaren standards (Sennheisers) for the homies, we could walk around wearing them with our pants sliding off our arses. If enough of us do it he could flip it to some corporation with deep pockets, McLaren financing problems solved Dawg.

      2. Precisely – and the strangest bit about this deal is that they bought beats for £3bn dollars. A huge amount more than the rumoured McLaren deal. The power of branding.

      3. True, but most the brands they buy are hardly known in the wider world. I’d say for similar reasons that you state there’s a strong chance they’d leave the McLaren brand untouched.

      4. Davey P – Absolutely, the brand is what they’re after. Beats and Apple both sell overpriced, average products, that are marketed very well to appear ‘cool’ to the majority of people who don’t know any better and probably don’t care. They just want to buy the brand that everyone else has. Ask the average Apple or Beats user who McLaren are or what their philosophy is and I doubt more than five percent of them would even have heard of them, let alone know much about them.

        1. Further to my comment above.. Apple and Beats are about branding and marketing, making average products appear to justify their high price tags by clever marketing – I mean the latest phone is marketed as having twin stereo speakers, it’s that desperate – Whereas McLaren are about super high tech engineering and innovation. Their philosophies appear to be 180 degrees apart, in my opinion.

      5. Apple bought Beats mainly because of a music streaming service that Beats developed and that Apple renamed as Apple Music . Apple needed such a service to fight competitors such as Spotify, Deezer and of course Google alternative.

        The headphones business was an accessory

  4. “The problem is that Apple doesn’t appear to be going in that direction any longer. For several months now, Apple has been backing away from its earlier automobile project and people who had been employed on the secret project have now begun to be laid off.” Really? Don’t believe every rumour you read…

  5. My first reaction last night to the Sony news was ‘You’ll have to prize McLaren from Ron’s cold, dead fingers’. Fat chance of that. However, the board meeting is interesting news. Ron is Mr McLaren. Without him, it would be very odd indeed.

  6. “McLaren is not in discussion with Apple about any potential investment,”

    Surely there are endless ways that statement could be construed to be accurate while not ruling out some sort of relationship between Apple and McLaren.

    Is a “discussion” the same as a negotiation? Or an agreement? Or has the deal been done? In which case the discussions have finished…

    And if not a “potential investment” then why not a “strategic partneship” etc etc?

      1. If there were an investment that’s already agreed and signed, maybe even a financial transaction triggered for execution at a later date, then strictly speaking there would be no ‘potential investment’. Or discussions have taken place and are completed, with some party now having an option they can execute within a given deliberation period.

        Anyway it’s comforting to know that someday, Joe might be able to tell us more.

  7. McLaren is one of the best examples of a car company or racing team that carried on with the name of its eponymous founder despite the founder no longer being involved. It is certainly much better known these days because of the success in the “Ron Dennnis” era than in the Bruce McLaren era would you not say? Why could it not go through a similar process again and move on to a third era of ownership structure?

    1. Ron has never built a car that won the Indianapolis 500. Bruce McLaren made a lot of money and found many fans in North America owing to Can Am. Americans and Canadians admired McLaren when it competed in the USA. It could be said that McLaren (and Cooper, Brabham, Lotus, Lola, Porsche, Reynard etc) understood that North America was a significant market…

      Could McLaren survive a third ownership change? I dunno. I wouldn’t be surprised if Ron kicked off Project Five.

    2. Because we are talking about a huge global company that routinely buys other companies for the sake of owning the technology that company possesses in order to put it into its own products, but then the original brand name disappears, never to be seen again.

  8. Thanks Joe, this is why I read your blog above everything else. I was waiting for you to write about it, so that I could read an informed opinion, and I wasn’t disappointed.

  9. Is there a hint of a subtle whisper formerly known as tentative leak indication of about when the important board meeting would happen?
    Thank you.

  10. I disagree with the suggestion that Apple doesn’t work with other tech companies. Apple were a founder of ARM (the processor designer) and major share holder until they sold it in order to stay in business; today, Apple are an ARM customer and the two companies collaborate on design. Apple is a customer of Intel and they ask Intel for processor features which later appear in processors sold to other computer manufacturers. Companies which Apple has purchased for their intellectual property have been much smaller than McLaren (e.g. PA Semi purchased for $278 million in 2008).

    If Apple wished to use McLaren technology, I assume it could be achieved by a conventional buyer/provider relationship. But if somebody proposed that Apple purchased McLaren Automotive or McLaren Technology Group shares in order to access technology, I think Apple would walk away. McLaren comprises a diverse group of companies which don’t connect with Apple’s current (or future?) aspirations.

    McLaren designs cars, finds companies who can develop and manufacture components and puts the bits together. It’s similar to how Apple works. But if Apple wanted to make a car, they’d buy or work with a company that currently manufactures cars. What did Tesla do? They bought a 50 year old car plant and paid Toyota to teach them how to use it. What are Google up to? Depending on the day of the week, they seek a partnership with Fiat Chrysler — or Hyundai. At the same time, Google signal to Volvo and Ford that the doors are still open.

    1. McLaren without Ron Dennis is an idea that I find difficult to stomach as the brand seems to be almost entirely based around him, down to the appearance of everything they create, and the things used to create them. His level of attention to detail is rare and would be greatly missed by many.

  11. I struggle to believe that after 40 years of building McLaren into the company it is today that Ron Dennis, even in light of his advancing years, would hand his company over to a bunch of whizzkids who mostly weren’t even born when he took over McLaren.

    From everything I understand about Dennis I think he has more dignity than that, and will only want a buyer who will commit to keep building end enriching McLaren as a business and a brand. That’s what he’s worked his entire life towards.

    1. 100% agree. I think Ron is also pretty patriotic as well, and would want it to stay in british hands if possible.

      I believe when the McLaren supersonic car was in progress in the 90’s, part of the motivation behind it was to make sure the LSR stayed in the UK rather than going back to America with Breedlove.

      Any idea on who the driver would have been for that Joe? There was a rumour it was going to be Senna at one point wasn’t there?

  12. Maybe FT is confused and the real target is/was McLaren Engineering in Detroit? They do have some expertise in hybrid development and consumer level product.

  13. “although to be fair there have been many car companies in history which carried the name of someone who had been removed from the ownership.”

    One immediately comes to mind…

      1. “Audi is the Latin translation of horch, from the German verb ‘Horchen’, which means ‘Listen’ (compare English ‘hark’). The Audi name was proposed by a son of one of his business partners from Zwickau.”

        Well that I did not know.

        1. Does this tie in with the current inexplicable Audi “Grace Bros” tv advert?
          Using the theme song from “Are you being Served” seems to remove any doubt that Audi are trying to create a 1970s feel! No? then what is the purpose?? No doubt the ad agency, over a few long lunches spun a background story which made sense to someone at Audi in a postprandial glow, maybe they even signed something!

  14. An Apple deal with Ron to provide the funding to buy out the other partners? Would seem to fit the evidence (and be between Joe’s lines).

    Apple has bought companies and left management in place. Since Apple EVP Eddie Cue is a car guy (Ferrari board member) they may see it best to leave the racing and supercar bits under Ron’s purview.

      1. A technology sharing deal makes a lot of sense. Either Apple outsourcing some R&D to those best placed to do it efficiently and with the infrastructure (we all know they run one of the best racing R&D programs in motorsport let alone all their consulting work @ the technology group) or a simple sharing of IP and patents…

        Time will tell!

  15. 1) Take notice no comments are coming from Apple or anyone connected to Apple ( allow me to introduce myself )
    2) Apple does not need McLaren ( Automotive – Technology or F1 ) for anything . Fact is Apple is 100% self contained and will remain so well into the foreseeable future with more resources and technology available at its finger tips than all of F1 combined [ not to mention being substantially better off financially ]
    3) You are absolutely correct Joe when it comes to Apple ever becoming an automotive manufacture albeit with one minor correction . The reality is Apple never seriously considered entering into the financial black hole known as automotive manufacturing . Fact is everyone at Apple from its CEO right down to the lowliest investor knows the only way to make a billion dollars/pounds/euros in automotive manufacturing : is to spend a hundred billion. Fact is all reports to the contrary have been contrived by the media with Apple allowing them to continue to do so only because of the increased and free media attention it brought the company
    4) The one and only even remotely viable way Apple might ever get involved with McLaren [ any division/group ] or any F1 organization would be sponsorship . But the reality is Apple needs F1 like it needs its current OS to crash upon itself . As well as the fact that no one in Apple from top to bottom would ever countenance any involvement in motor sports or automotive manufacturing due to the extreme green ethos of the company – Therefore : One may correctly assume that the ( formerly ) much vaunted Financial Times as has almost every other media outlet from print to digital : has gone down ( Alice’s ) ‘ Rabbit Hole ‘ of blatant speculation and manufactured fiction in the quest for bigger headlines and increased sales / viewing ; End of lecture . Quiz on Friday . Donuts and Tea/Coffee at the back of the room .

    1. @Hardley T Whipsnade anti Apple & Motorsport comments

      Alternate suggestion. Apple to enter Formula E in conjunction with McLaren Group.* Apple get access to McLaren technology for motor and control systems. McLaren get access to the rumoured new Apple battery technology, which they can use in their road cars which will mostly be hybrid. So two companies avoid having to ‘re-invent the wheel’. The Apple car is far from dead.

      *Not so strange, when Porsche were recently on the verge of entering.

      1. Not even remotely likely . Formula E is a losing proposition with a non-existent fan base and less than zero TV ratings as well as Apple having no need to promote the brand at the cost it would take to get involved . They’re doing just fine as is . And , once again no one in Apple from Tim Cook right on down the line would countenance any form of motorsport [ as a side note Apple and its investors do not support EV’s of any kind either .re; Jobs response to Musk when Elon came crawling to him and the Apple board for a loan/partnership ] and technologically Apple is so far ahed of the curve they have no need for McLaren’s services at any level . Also the last time Apple did get involved in motorsport [ the Apple sponsored Kremer Porsche 935RSR debacle ] it was a total disaster both financially , internally as well as amongst the AppleHead community . So no ! The reality is the Financial Times is playing the headline game with no substance behind their claims what so ever knowing the name Apple would draw in readers . And sorry Iain:R8 , not only is the Apple Car dead : the fact is it never existed beyond Smoke & Mirrors to begin with . EV or otherwise . And as a side note . If Apple were to get serious about losing a pile of cash in such an endeavor : guaranteed they’d partner up with ex McLaren genius Gordon Murray seeing as how his car(s) are production ready just needing an influx of cash and Gordon is more Apple’s style . Not McLaren !

        1. @Hardley T W

          For manufacturers, FE is not about ‘fan-base’ or TV ratings. It’s about a much longer marketing strategy. I never really thought that “Apple Car'” was anything other than a project title for an integrated vehicle system, and not a physical vehicle. Entering FE would be peanuts for Apple. Technical sponsorship of a team, and the resulting exposure to the wider car industry would be beneficial.

          …..”Apple is so far ahead of the curve, they have no need of McLaren’s services at any level”……. It is widely recognised that Apple take existing technology and add a new and often brilliant twist to the original concept. They don’t invent. McLaren are innovative and have original IP in a number of fields.

          …..”guaranteed they would partner up with ex McLaren genius Gordon Murray”

          Your definition of genius and mine, are different. I consider iStream to be a little way behind the curve, from both a technology, and design perspective. Nice guy, interesting ideas.

  16. An interesting article in the Telegraph today, a source at McLaren confirmed Jo’s story with one or two variants. The other side was Apple’s position. Conservative estimates are that Apple’s European arm has in the region of £55 Billion in cash reserves, so it could actually buy F1 without blinking… The other point was that they are a very high profit, cash rich company, and that tends to lead to high tax bills (where governments can be bothered to collect). The automotive industry is famously good at loosing the odd £100 million here and there as a tax write off, overall financially viable for the likes of Apple.

      1. In today’s fast world there is simply no time to include the E, that would be strenuous.

      2. My most humble apologies… (he says, prostrating himself before the lap top in the most sincere hope of forgiveness…)

  17. Beats by dr dre
    Emagic
    Siri

    Just to name 3 brands who weren’t incorporated inti Apple but stayed their own thing, within Apple.

    I think McLaren technologies is the most interesting part for Apple. Not because of F1, but for their processes, knowledge and superfast development. And Ron Dennis.

  18. Was not a likely tie up, not the sort of business that would easily integrate with Apple. Would be a good catch for a title sponsor though ……

    For a team that I have supported for many years and is so fond of projecting the image etc, why have they not branded the side pods on this years car ! For the last few races put the name of the team on the side pods or the drivers names, like in the old West days, I remember a BBC documentary The Team when Ekrem Sami led a prospective client in to see there branding on the car, in the good old days of the flying fag packets, the same care and attention today would be worthwhile, wonder do the regret turning down Diageos rumoured title sponsor offer a few years ago (Johnie Walker). 2017 better be good

  19. If that’s what the new F1 is supposed to be in the near future, count me out as viewer. I want the real racers there, owners and drivers alike, but if they can’t be there anymore, ok, i’ll watch something else. Maybe le mans, maybe indy…or some redneck race.

    Robot battles next for F1? Mac x Windows x amazon x google? Not for me.

  20. The thought of Tim Cook prancing around the stage in his Steve Jobs outfit telling the sycophants that Apple have invented the “automobile” and having them all whoop and cheer would probably be the last straw for me and have me putting all my Apple kit in the skip!

  21. So will we see Fred driving an Apple Mac next year with TAG moving elsewhere maybe to Red Bull. If It the way for Ron to keep the status Quo it sort of sounds OK.

  22. the whole deal is about autonomous cars..Apple is in a fight with Google and others for the technology to make it happen. McLaren can lend a platform for testing ..but more than that, un leach a bunch of engineers that know cars..i’d be interested in knowing who is playing in the new FIA Autonomous race series.

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