Mercedes-Benz and Aston Martin have reached an agreement under which the German carmaker will supply engines in exchange for as much as a 5 % stake in the British sports car company.

Two people with knowledge of the deal told the Financial Times that Aston, which has struggled to compete with better-funded luxury carmakers in recent years, will announce the agreement today.

Aston and Daimler, Mercedes’ owner, signed a letter of intent in July to begin talks on a partnership. Daimler will get observer status on Aston’s board in addition to an initial 4 % stake in the non-cash deal.

The German company will increase its holding to 5 % of non-voting shares in Aston, dependent on further development of the agreement, such as a looming deal for Daimler to share development of its electronic systems and parts, the people also said.

The British brand will gain access to the technical expertise of Mercedes’ high-end AMG division, in order to develop new V8 engines to power its next generation of models, seen as key to the company’s attempts to reboot itself after years of under funding and ownership changes.

The agreement will enable Aston, which plans to announce its new chief executive to succeed Ulrich Bez in the first quarter of 2014, to avoid the huge costs associated with developing its own engines. This will also give Daimler a foothold in one of the world’s most prestigious car brands. Aston’s current engines are developed in conjunction with Ford, its previous owner.

Via Financial Times


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