McLaren F1 team and sports car businesses reject takeover bids

The British sister companies that own the Formula One outfit and build the road-going supercars have no interest in selling themselves to potential buyers.

The McLaren Honda Formula 1 Team McLaren MP4-31 Honda RA616H Hybrid racer at Monza in Italy in September. Charles Coates / Getty

Shareholders in McLaren’s Formula One team and luxury sports car sister company are committed to both businesses and have turned down bids from prospective buyers, says the chief executive of the brand’s automotive firm, Mike Flewitt.

Ron Dennis, who headed the McLaren Technology Group (MTG) that runs the Grand Prix racing team that will take part in the season’s final race at the Yas Marina circuit in Abu Dhabi on Sunday, was forced out last week after what was reported to be a dispute over a Chinese takeover bid that Mr Dennis backed and other investors opposed.

Founded in 1963 by Bruce McLaren and known for winning titles with drivers such as Lewis Hamilton, the British brand set up a separate sports car maker known as McLaren Automotive in 2010 to rival the likes of Ferrari and Aston Martin.

Mr Flewitt said there had been interest in the brand but shareholders were committed to keeping their stakes in both firms.

The Bahraini investment fund Mumtalakat, Ron Dennis and TAG, a company led by the Saudi-born businessman Mansour Ojjeh, are the automotive firm’s three biggest shareholders, and also own all of MTG, responsible for Formula One and applied technologies.

“There have been a number of bids,” Mr Flewitt said.

“I am comfortable with where our current shareholders are that they want to retain ownership of the company. They want to develop both companies. I genuinely believe they are very committed to them,” he said.

But he said Mr Dennis would need to work out his relationship with the other shareholders and his involvement with the brand going forward.

There was also speculation in September that the US technology giant Apple had made an approach to invest in or buy McLaren, according to the Financial Times.

“There wasn’t a bid from Apple,” said Mr Flewitt.

“They visited. We talked. We talked about what they did. We talked about what we did. They toured. It never matured to a definitive proposition,” he said.

McLaren Automotive, which only began building cars in 2011, has grown rapidly and is aiming to double the number of luxury hand-made models it builds to more than 3,000 this year, not far behind Aston Martin.

The firm makes all of its high-end models, which range from just over £120,000 (Dh544,000) to around £2 million, depending on customisation, at its Woking site in southern England and exports 92 per cent of its output.

The company said it expected to post a similar pretax profit in 2016 to last year’s £5.4m as it invests in expansion, but that as an exporter the fall in the pound since Britain’s vote to leave the European Union was a boost.

While costs have risen on the 40 per cent of material it buys that is euro-denominated, this has been more than offset as over two thirds of its customers buy in dollars, it said.

“Of the approximate 17 per cent currency devaluation, in round numbers, approximately a third remains,” said Mr Flewitt, when asked about the net benefit once extra costs and currency hedging were stripped out.

Britain’s overwhelmingly foreign-owned car industry has been lauded by politicians as a bright spot for manufacturing, but it was a strong supporter of staying in the EU ahead of the June 23 referendum.

Mr Flewitt said he was confident politicians would secure a good “Brexit” deal for the industry, although called on the government to prioritise free trade and freedom of movement.

“What we need is a professionally-managed exit … as smoothly as possible,” he said.

“In this modern age, we should be moving to free trade all over the world not putting up tariffs. It’s completely the opposite to my principles of business.”

* Reuters

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