JANUARY 9, 2007

Bahrain buys into McLaren

The Bahrain government has bought a 30% shareholding the McLaren Group, using its recently established new holding company called Bahrain Mumtalakat Holding. The company is chaired by Sheikh Ahmed bin Mohammed Al Khalifa, the Bahraini Finance Minister and a member of the Bahrain royal family. The company is wholly-owned by the Kingdom of Bahrain.

If the deal is cleared by competition authorities, the team will be 40% owned by DaimlerChrysler, 30% by the Bahrainis, 15% by Ron Dennis and 15% by the TAG Group (Holdings) - the latter being an investment vehicle belonging to Mansour Ojjeh.

The company will continue with the same management team as before but there is a very significant change in that it is the first time that Dennis and Ojjeh have been in the minority in terms of share ownership. This does not mean a great deal as there can be covenants between those involved to only act together (such an agreement previously existed between Dennis and Ojjeh).

The move is interesting coming in the wake of the acquisition of shares in Ferrari and in Spyker by various Arab entities. Ferrari is partially owned Abu Dhabi's Mubadala Development Company, a wholly-owned subsidiary of the Government of Abu Dhabi, which purchased five percent of Ferrari for $137m. It is worth noting that the Spyker F1 team is also partially owned by Mubadala. It is also worth noting that 15% of Spyker is also owned by a member of the Al-Khalifa clan through a company called MerchantBridge, which is controlled by Sheikh Mohamed bin Abdallah Al-Khalifa. This may be the reason that there have to be competition checks.

The deal suggests that McLaren may have plans of expansion in the Middle East where governments are keen to generate new industry. It could be that there will ultimately be a production facility for McLaren in Bahrain when McLaren starts work on its next road car project.