MCLAREN: BAHRAIN TO TAKE FULL CONTROL OF THE TEAM’S PARENT GROUP IN DEAL WITH MINORITY INVESTORS

According to information from Sky News, it is understood that Mumtalakat is close to finalizing an agreement with the remaining minority shareholders of McLaren to transform their equity into instruments resembling warrants. These upcoming contracts will possess economic rights allowing them to benefit from potential future ‘liquidity events,’ such as McLaren’s initial public offering, without being classified as traditional shares.

An insider suggests that a formal agreement between the parties could be reached as early as later this week. The proposed deal involves converting 20% of McLaren’s equity into these new contracts, resulting in the state of Bahrain becoming the sole shareholder of the Formula 1 team-owning group.

Despite McLaren facing challenges during the pandemic and resorting to external shareholders for capital, the impending deal signals Mumtalakat’s confidence and leadership in steering the turnaround of the Woking team. McLaren’s intricate capital structure has played a pivotal role in forming a lasting partnership in recent years.

Earlier in the year, Mumtalakat acquired McLaren shareholdings from Saudi Arabia’s sovereign wealth fund and Ares Management. There were reports of an additional £80m investment by the Bahrain-based fund into the company, known for producing the Artura supercar.

The Covid-19 pandemic prompted McLaren to undergo extensive restructuring, involving job losses and significant equity and debt fundraising to stabilize its balance sheet. Various corporate transactions, including the sale of a stake in McLaren Racing and the sale-and-leaseback of its Surrey headquarters, were overseen by Mr. Walsh. McLaren Applied Technologies, generating revenue from corporate customer sales, was also sold in 2021.

Following the departure of Ron Dennis in 2017, McLaren’s divisions were reunified. The company experienced a remarkable improvement in performance during the 2023 season under the leadership of CEO Zak Brown. Despite a challenging start, McLaren became regular podium contenders since the Austrian Grand Prix.

Looking ahead, McLaren aims to challenge Red Bull in the 2024 season. The team, under Zak Brown’s leadership, has introduced new personnel that significantly contributed to its improved performance. One notable challenge is the team’s current wind tunnel facilities, which lag behind competitors like Red Bull, Mercedes, and Ferrari. However, McLaren’s new wind tunnel is expected to be completed in 2024 and operational for the 2025 season.