(Bloomberg) -- Private equity fund Investindustrial is near an agreement to buy an Aston Martin stake to shore up the finances of the British sports-car maker, two people familiar with the matter said.
Investindustrial, based in London, has trumped Indian automaker Mahindra & Mahindra Ltd. to invest in the automaker, said the people, who asked not to be identified discussing private negotiations. A final agreement has not yet been signed, the people said.
The exact size of the stake transaction, which values the automaker at about 750 million pounds ($1.21 billion) including debt, has not yet been determined, one of the people said.
The deal would give Aston Martin a much needed cash infusion to invest in automotive resources to compete with Bentley and Ferrari.
The Times of India reported on Thursday that Mahindra had pulled out of the bidding, citing unidentified sources.
Investment Dar Co, led a group of investors that bought Aston Martin from Ford Motor Co. in 2007 for 503 million pounds.
"An industrial owner would have been preferable to a financial owner," said Ashvin Chotai, the managing director of Intelligence Automotive Asia in London. "Probably Mahindra could have provided them with a long-term commitment. That said, it was a trophy asset for Mahindra and would have required a lot of investment with very few synergies."
Aston Martin, Investindustrial, Mahindra and Investment Dar representatives declined to comment on the talks.
The deal would return Investindustrial to high-end vehicle manufacturing after selling Italian motorcycle maker Ducati to VW's Audi this year for 860 million euros ($1.11 billion).
While the original Mahindra bid was higher, Investindustrial's offer includes plans to use technology and car parts from AMG, the Mercedes-Benz unit that makes sports cars, two people familiar with the talks said last week.
Investment Dar hasn't had funds to spare for Aston Martin. The Kuwaiti company agreed in February last year to reorganize 1.37 billion dinars ($4.9 billion) of its own debt after missing payment on an Islamic bond in May 2009. The restructuring is being implemented under Kuwait's Financial Stability Law, enacted by the government in April 2009 to bolster financial institutions hurt by the credit crisis.
Aston Martin is the only global luxury-car brand that's not part of a larger auto group and its independence could be a handicap with the auto industry under pressure to develop technologies to improve fuel efficiency.