Giant Indian firm confident of a deal that would see it take over Ducati
One of India’s largest motorcycle firms, Bajaj Auto, is confident of becoming the winning bidder for Ducati.
As reported by Indian publication The Economic Times and U.S. online publication Asphalt and Rubber, Bajaj Auto MD Rajiv Bajaj believes his firm—which already owns a 47 percent share in Ducati’s European rival KTM—has the financial and regional resources required to complete a successful takeover of the Italian manufacturer, currently under Volkswagen AG ownership.
“We are very close to finalizing a very promising alliance (in purchasing Ducati), it’s not certain that it will happen, but if it happens, it will open up enormous possibilities for the company,” Bajaj said while addressing shareholders at the 10th annual Bajaj Auto general meeting. “That is why we keep our money (cash on books) with us, so, once in a while, when an opportunity comes along, we are ready.”
Bajaj’s books are very healthy, with The Economic Times reporting the company has Rs 13,250 crore of free cash, translating to around $13 billion, which is plenty for the purchase of Ducati, rumored to be in the $1.5 billion range.
The sale to Bajaj makes commercial sense for Ducati, as Bajaj has a firm foothold in the Asian market via its range of small capacity motorcycles, scooters, and rickshaws, and is looking for a premium brand, primarily focused on large capacity motorcycles, to complete its portfolio.
Ducati is also reportedly interested in moving further into the small capacity sector like BMW has done with its Indian built G 310 streetbike. But to do so successfully, Ducati’s Global Sales and Marketing Director Andrea Buzzoni has said it will require an Indian partner. Currently, the smallest motorcycle in Ducati’s range is the 400cc Scrambler Sixty2.
“There is a huge potential in terms of volumes in smaller cc bikes,” Buzzoni told The Economic Times. “In western countries, the motorcycle riders are getting older and older, Ducati will have to offer a bike for the younger population at the entry level. And in case, Ducati will decide to enter the small displacement engine bike—Indian (sic) will be part of the plan,” Buzzoni had said.
But what of KTM? Bajaj said at the shareholders meeting that he does not intend to increase Bajaj Auto’s share in the Austrian manufacturer.
“We have no desire to acquire more (of KTM), even if we did, we possibly could not as almost all of that 52 percent is owned by Stefan Pierer himself,” Bajaj said. “And we don’t want him to sell, as he runs the company, he does a very good job at that, he is a very good friend of us and we have a wonderful partnership with them.”
As we mentioned in our earlier article on the sale of Ducati, any sale of the brand would require the go ahead by Volkswagon’s powerful European labor unions, who control half of the 20-strong VW supervisory board and are reported to be against any sale of Ducati.