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Insight: Why is Apple being linked with F1 takeovers and what's up at McLaren?

Apple has been linked this week with a potential bid to buy McLaren and a few weeks ago it was even suggested that they may be looking to buy F1, s...

Insight: Why is Apple being linked with F1 takeovers and what's up at McLaren?
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Apple has been linked this week with a potential bid to buy McLaren and a few weeks ago it was even suggested that they may be looking to buy F1, shortly before Liberty Media actually completed the first part of the deal for the premium racing series.

The Apple F1 takeover rumour had all the hallmarks of a smokescreen; get everyone looking to the left, when the real story was over on the right.

The Apple McLaren story has more legs, in that conversations certainly took place, but ultimately it's just as unlikely to happen. But it went far enough for Silicon Valley sources to tell the Financial Times that something was up.

Appearing in the pink pages, read all over the globe, the story also put everyone on alert that there's a deal to be done at McLaren, that the Woking business has world-class technology of interest to the world's most successful tech company.

With F1 Liberty Media's makeover of F1 set for lift off in 2017, it's a good time to come and do business with McLaren.

So why is Apple being linked to these takeovers and what is happening behind the scenes at McLaren to bring this speculation about?

Apple

Apple is a very cash rich company with a war chest of $200 billion in cash and a track record of some interesting and expensive acquisitions, like the $3 billion paid for the audio company Beats International (a story also broken by the FT) which makes headphones, but which also had a music streaming system that became the basis of Apple Music, the company's response to Spotify.

Everyone knows that Apple has been so successful because it has innovated and based that innovation on technology. Behind those innovations has been excellent design, but also strategic acquisitions; the iPhone, which spawned the smart phone industry and the iPad which gave users a new way to interact with the world, both rely on touch screen technology which came from a company Apple acquired.

So for them to acquire a company like McLaren with its patents on all kinds of automotive and materials technology and prowess in high density electric motors (it is the motor supplier to Formula E) might seem, on the face of it, like another strategic purchase in the same vein ahead of a push towards a new frontier.

Apple is known to be interested in getting into the automotive sector. That picture, however, has been clouded by a number of lay-offs of staff working on autonomous vehicles there.

That McLaren denied the FT story somewhat equivocally also speaks about what is happening behind the scenes in that company.

Ron Dennis, Mansour Ojjeh

For some time now there has been some friction between two of the original partners, Ron Dennis and Mansour Ojjeh. After the split with Mercedes Benz, which had been a shareholder before deciding to buy Brawn GP in 2009, the company resolved around Ojjeh and Dennis holding 25% each and the Bahraini sovereign wealth fund owning 50%.

The McLaren Automotive company has a different share structure in which those three shareholders have less of a combined stake and there are other shareholders involved.

But the value to Apple in the discussions as far as they went appears to have been more in the patents and the suggestion is that the interest therefore lay more with the McLaren Technology Group.

Martin Whitmarsh

Now when Dennis came back on the scene in 2014 to replace Martin Whitmarsh, it was not because the shareholders felt that he could do a better job and as a result Whitmarsh was fired. It was because it was agreed that Dennis would first take over the reins as CEO and then buy out the other partners within a certain time frame.

Ron Dennis

He spent time in China looking for backers, but so far he has not managed to complete the deal.

Sources close to the situation suggest that time is now running out on Dennis' hunt for backers. The topic is likely to have been discussed at a board meeting which took place today. Should the situation remain unchanged when the deadline is reached later this year, the suggestion is that the pact would lead to the reverse scenario coming into play; the other shareholders would buy him out.

So is it the case that the Apple deal was something worth exploring for the tech giant, one of many such explorations of potential strategic purchases, but ultimately something of a 'wishful thinking' exercise on the part of Dennis and his allies in the company?

One thing is for sure; it's sent out a signal to other potential investors and the next few months look set to be very interesting around McLaren.

What do you think? Leave your comment in the section below
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