McLaren Boss Dennis Plots £125m Share Swoop

Ron Dennis, the McLaren supremo, is in talks about financing a buyout of a fellow shareholder in the automotive group as a possible prelude to a return to the helm of its Formula One (F1) team.

Mr Dennis, who was part of David Cameron’s business delegation during his visit to China this week, is understood to be targeting a deal that would see him acquiring the 25% stake in McLaren Group owned by Mansour Ojjeh, a Saudi businessman.

The McLaren boss, 66, is said to have met a number of prospective Chinese investors about raising the capital in recent days, although it is unclear whether any firm proposals have been tabled.

Sources suggested that China Investment Corporation, the country’s giant sovereign wealth fund, was among the parties with which Mr Dennis has held tentative talks.

Mr Dennis, who stepped down as McLaren’s F1 team principal in 2009, is said to be distressed at the current performance of the Woking-based outfit, which ended the 2013 season in Brazil last weekend without a single podium finish in 19 races. That sealed the team’s worst season in more than three decades.

The owner of 25% of McLaren Group, Mr Dennis is also thought to be interested in buying part of the remaining 50% stake, which is owned by the Bahrain-based sovereign wealth fund, Mumtalakat. Doing so would give him overall control of the company.

One ally said he was enticed by the idea of trying to revive the McLaren F1 team’s fortunes. An engine supply deal with Honda, accompanied by tens of millions of pounds a year in funding, is thought likely to give McLaren a major boost when it comes into effect in 2015.

Mr Ojjeh, who is recovering from a double lung transplant operation, is understood to be willing to consider a sale of his stake in the company, although it is unclear whether Mumtalakat is also contemplating selling.

The Bahraini investor is also vying to take ownership of another major sports rights business by joining a consortium which is bidding for IMG, the athletes’ representation agency.

That consortium is being led by CVC Capital Partners, the private equity group which is the largest single shareholder in F1.

Automotive industry insiders said on Thursday that acquiring a 25% stake in McLaren Group would be likely to cost in the region of £125m.

The company has expanded well beyond its motorsport origins, having sought to commercialise its technological expertise through applications in sport, medicine, biomechanics and entertainment.

Speaking during the Prime Minister’s visit to China this week, Mr Dennis said: "We consider this country to be a core part of the next 50 years of McLaren’s future. McLaren is looking to work closely with Chinese organisations as we seek to develop and expand the entire Group and develop a whole range of businesses in China.

"We’re looking to establish lasting partnerships for the mutual benefit of both China and McLaren. We hope that a strong trading relationship will be a key element of our future and that the best of British technology can contribute to success and growth in China."

If Mr Dennis does succeed in regaining control of at least 50% of McLaren Group, it could spark a power struggle with Martin Whitmarsh, the current F1 team principal.

Mr Whitmarsh has been reported in recent days to be seeking to re-sign the Spanish former world champion, Fernando Alonso, who drives for Ferrari.

Mr Dennis is likely to be reluctant to see Alonso return to the McLaren garage after the driver was partly responsible for landing the British team with a $100m fine over the ‘Spygate’ affair in 2007.

Ross Brawn, who has just stepped down as team principal of Mercedes, is another contender to take the top role at McLaren, an alternative outcome that Mr Dennis would support, according to a person close to him.

Mr Dennis also owns 15% of McLaren’s road-car arm, McLaren Automotive, and has been focused on developing that business since his departure from the F1 team.

Its operation in China has been growing rapidly, and this week Mr Dennis set it an ambitious target of opening eight dealerships in ‘second-tier’ cities such as Nanjing and Shenzhen by the end of next year.

“In time McLaren anticipates that China will contribute 10% of its global automotive sales, resulting in exports from the UK of over £50m per year,” he said.

A McLaren spokesman said on Thursday: "Mansour Ojjeh has not expressed any desire to sell his shareholding. So it is business as usual for all at McLaren, and we are fully focused on developing our new Formula 1 car so as to improve our on-track performance for the 2014 season.”