The McLaren Group has agreed to sell its technology division, McLaren Applied, to investment group Greybull Capital.
McLaren has restructured its business in recent months, selling its Woking headquarters in a leaseback deal which raised £170 million, as well as raising a further £550m from new and existing shareholders.
The latest move sees its technology division sold off to Greybull for an undisclosed sum, allowing the British marque to focus on its automotive and racing divisions.
The applied business will continue to be led by the current management team and will continue to service its existing customer base with Greybull’s investment enabling the company to further expand on its current business strategy.
“The divestment of Applied further enhances McLaren Group’s strategic focus on supercar manufacturing and elite motorsport, with Automotive as the core profit driver,” a group statement said.
“It builds on the Group’s recent equity raise and launch of a comprehensive debt refinancing, as well as the successful introduction of minority investment into McLaren Racing last year.
“McLaren Applied will continue to operate its technology business focused around transformative and innovative products in electrification and telemetry, control and analytics. Greybull’s investment will support the company’s strategy to exploit new market opportunities while continuing to build on its history in motorsport and automotive applications.”
McLaren has looked to refocus on its core business of automotive, which took a major financial hit last year during the worst of the pandemic. However sales of new cars have rebounded strongly in 2021, whilst its racing division has also seen improved on-track performances in both Formula 1 and IndyCar, with an eye to further expanding into Formula E.
Paul Walsh, McLaren Group Executive Chairman said: “The completion of the strategic review of Applied is the latest in a series of proactive steps to build a more focused and profitable Group. McLaren now has the right strategy and focus to achieve our ambitions as a global luxury supercar and elite motorsport business, underpinned by a more sustainable capital structure. At the same time, we are delighted that Greybull’s investment will provide a strong platform for McLaren Applied to innovate and grow as a world-class technology, data insight and analytics business.”
Anthony Murray, McLaren Applied Chief Executive Officer added: “We are delighted to secure the investment which will underpin our strategic intent to pioneer a better future, leveraging our electrification and telemetry, control and analytics capability. We remain focused and committed to our existing customer and market segments of motorsport, automotive and public transport and this additional investment will ensure we can provide long-term stability and additional finance to develop market leading innovations for our customers.”
The transaction is expected to complete by the end of August 2021.
Well, this is certainly a new low for Zak Brown and McLaren. At this point, one really has to wonder if Brown (and possibly others within the company) are involved in some sort of buyback/embezzlement scheme. Let’s look at why this is so questionable:
-McLaren was profitable in all areas until 2016 under Ron Dennis, who was forced out of the company (with no real reason given, but we know why) at the end of 2016. Even the F1 team was breaking even despite having no title sponsor and getting royally screwed by Honda, causing them to lose major long-time sponsors. IIRC, they were even at times still making money. Dennis had started to rebuild McLaren and hired some major talent, most of which fled soon after he was ousted (including Button).
-Ron Dennis wanted to buy the remaining 75% stake of McLaren that he did not own, which were owned by Mumtalakat and Mansour Ojjeh. It’s worth noting Ojjeh and Dennis were already on bad terms (due to Ojjeh stabbing Dennis in the back a few years prior in an attempt to get his McLaren shares). Dennis came up with the $1 billion that was agreed on by all parties. Mumtalakat and Ojjeh went back on their words and rejected his buyout, and instead ousted Dennis. During his final few years, they were also obviously sabotaging Dennis to make him look incompetent or to try and make him sell his shares and leave McLaren (e.g., 2011 Bahrain incident and the situation with Kevin Magnussen). Major red flag. This type of shareholder behavior is always indictive of some sort of scheme, and history shows Ojjeh was a dirty business partner and was in bed with Mumtalakat, working against Dennis.
-Zak Brown was then put in charge almost immediately after Dennis was ousted, so obviously this had been planned for a while. The company starts losing money in all areas right away, even though Brown was handed a world-renown luxury company that was financially healthy and had all of the tools needed to make even more money. Brown also instantly attempts to erase every trace of Ron Dennis by giving McLaren a makeover and focusing on the 70s era (a microscopic portion of McLaren’s history) and mostly ignoring the Ron Dennis-era, which is what put McLaren on the map (had Dennis not taken over in 1981, McLaren would have folded). The amount of money spent on giving McLaren an orange makeover, redesigning typefaces, etc must have cost a hundred million or more. One does not take a financially healthy company with a very distinctive luxury image, erase it, and revert to some arcane era that had little or nothing to do with the company that fans and sponsors had followed for 40 years. Imagine Hermes going back to beige, a color that 99.9% of their customer base probably doesn’t even know was once used by the company. Red flag.
-By 2018, even the F1 team is now losing money, likely due to the severance fee to Honda, and having to purchase engines from Renault. However, considering there were Renault logos all over, one must assume they got a hefty discount. By 2019 the cars were plastered with sponsors, which I can only assume were very low-profile deals because they were still not even breaking even. The team was/is still losing money despite Zak “Sponsorship Guru” Brown getting all of these new sponsorship deals and having young drivers with low salaries.
-Despite losing money all over the board, Brown could miraculously afford to enter McLaren in IndyCar, a series that is virtually unwatched and has zero relevance to the company; yet could not afford to enter WEC or IMSA which is 100% relevant to their road car business.
-Through all of this, Mumtalakat and Ojjeh (two largest Mclaren Group shareholders) have kept Brown in charge, despite literally tanking the company to the point where almost everything within McLaren Group is now owned by investment companies, and McLaren is basically McLaren in name only. This is the biggest red flag to me. Shareholders who actually want a company to succeed would never allow any of this to happen, and Brown should have been sacked after a year, if not sooner.
So how is Brown still there after five years of horrendous business decisions? Either the shareholders are even dumber than Brown is or pretends to be, or there is some sort of embezzlement scheme going on within McLaren.
IIRC, two of Greybull’s previous high profile investments in the UK were the Comet electrical chain and Monarch Airlines.