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.