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McLaren unifies its F1 and automotive businesses as Ron Dennis exits - what next for the English Ferrari?

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McLaren unifies its F1 and automotive businesses as Ron Dennis exits - what next for the English Ferrari?
Jun 30, 2017, 5:33 PM

The headlines today speak about Ron Dennis, finally taking his leave of McLaren by selling his shareholding in the team.

The headlines today speak about Ron Dennis, finally taking his leave of McLaren by selling his shareholding in the team.

Dennis was in a position to block a sale and with he and fellow shareholders at loggerheads since he was stripped of his executive functions, the unification of the racing, technology and automotive businesses was the ideal moment for him to cash out at the age of 70.

He will view it as a process of which he was entirely in control, where he has been able to capitalise on the other shareholders' desire to unify the companies to exact a hefty price for his shares.

McLaren's other shareholders will move on without him, having taken on debt finance to secure his stake.

The question now is what happens next for the McLaren business? Do principal shareholders Mansour Ojjeh and the Bahraini Mumtalakat group seek to sell shareholdings to other investors or will they seek to do what Ferrari has done recently and seek an IPO (stock market listing)?

The price for Dennis' 25% stake in McLaren Technology Group and 10% of the automotive group suggests that the total business is valued at £2.4 billion.

McLaren is in many ways the English Ferrari and with F1 technology and automotive divisions the parallels are there. The brand is known globally through motorsport, which remains at the heart of its marketing. The difference is that McLaren is a 54 year old brand and Ferrari a 70 year old brand with a much longer tradition of producing desirable road cars. Ferrari achieved a valuation of £7 billion when it floated in 2015.

McLaren factory

Ferrari is all about passion and style, McLaren is about precision and innovation. At least that what McLaren is supposed to be about, but currently the F1 team is faltering due to the poor performance of its engine partner Honda. Some kind of resolution of that situation is also imminent with McLaren desperately needing to improve competitiveness.

This year saw new Executive Director Zak Brown take McLaren back to the Indianapolis 500, which started out as a ruse to keep Fernando Alonso motivated, but which has reignited the desire within the group to go racing at Indy and Le Mans, as it has in the past.

The McLaren Group employs 3,400 people and had turnover last year of £898 million. McLaren Automotive has produced over 10,000 cars, which is a little more than Ferrari sells in a year.

A statement from McLaren today noted that "McLaren Group has secured long-term financing to acquire these plus stimulate growth in its wider businesses and consolidate its financial arrangements."

What do you make of today's news? What do you think McLaren will do next? Leave your comments in the section below
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