Rajiv Bajaj is said to be in final stages of confirming an alliance with a new brand which points at a possible buyout of Ducati
Amidst a myriad of rumours, Bajaj Auto appears to be in the best possible stage to wrap up the selling deal of Ducati from VW. The brand’s Managing Director Rajiv Bajaj announced at the 10th annual general meeting with shareholders that a formal announcement will be made in the next one to two weeks regarding a new acquisition.
Bajaj and KTM bought the Husqvarna brand as part of their alliance and Ducati could follow it up considering that both the names have emerged more often when murmuring about the premium bike maker’s sales in recent months. Husqvarna bikes are about to be produced in India from next year sharing underpinnings with KTM with the possibility of entering into the domestic market at the high level.
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Rajiv Bajaj did not specifically mention about the subject of accession and nor has the brand confirmed that they are in the hunt to buy Ducati. But he did state that there is “the world of easy riding, the world of Harley-Davidson, Triumph and Royal Enfield”. This clearly points at the high-end premium space which is thriving of late.
With the new acquisition, he hopes to make a million motorcycles together and ultimately fill up the obvious product gap amidst having to revive Husqvarna. Ducati sold more than 55,000 units in 2016 and with Bajaj’s presence it could grow in volume substantially, after all, KTM’s annual production increased by four times since it became part of Bajaj and is now the second most profitable premium two-wheeler brand in the world. If the deal comes into existence, it could eventually lead to Ducati prices come down by a considerable scale in the future as Bajaj is expected to use its over Rs. 13,000 crore in reserves deligently.
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Ducati is luring interest from not only private equity firms but manufactures alike as the battle to own the famed Italian marquee intensifies. As an aftermath of the diesel emission cheating scandal and the consequent losses, Volkswagen AG is trying to minimize its current spending so that it could concentrate on future technologies involving autonomous driving, electric powertrain and connected car interface, etc.
Companies like Bajaj, Hero MotoCorp and buyout firms including CVC Capital Partners who formerly owned Formula One and Permira are said to be in the hunt for getting the big slice of Ducati. Moreover, Eicher Motors Limited, the company which runs Royal Enfield, could be weighing up the bids as well.
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Ducati will be a huge asset for any big manufacturer’s resume. For instance, since buying out KTM, Bajaj Auto has come leaps and bounds in terms of making the brand globally attractive and incorporating the high-tech advancements on its own family of motorcycles.
A formal sales process might have begun in recent weeks as Ducati is likely to be valued more than a billion dollar. Although no financial decisions have been legitly known yet, the bidding companies might decide against Volkswagen’s offer as well.
The German group’s Audi luxury car brand currently owns Ducati and its intentions to sell the superbike maker emerged firstly back in April. As no official statements made on who all are involved in the bidding process, people from Hero, Royal Enfield, CVC and Permira declined to confirm the matter said some reports back in June.
Source: MoneyControl