KTM promoter Stefan Pierer's Pierer Industrie buys out 100% stake in BMW's ... - Economic Times

MUMBAI: KTM, Europe's largest two wheeler manufacturer in volumes, in which Bajaj Auto owns 47% stake has acquired 100% stake in cult motorcycle brand - Husqvarna from its German rival BMW Motorrad. In a press statement, BMW Group confirmed stating it has signed a purchase agreement with Pierer Indust rie AG (Austria) for the acquisition of 100-year old Husqvarna Motorcycles. The acquisition will proceed subject to approval by anti-trust authorities. Both companies have agreed not to disclose the purchase price. It was sold to Italian motorcycle group Cagiva and became part of MV Agusta Motor S.p.A, in 1987. BMW acquired Italian firm Husqvarna from MV Agusta in 2008. The deal was finalised last week in Europe and the details of the deal will unfold later this week. The acquisition will strengthen KTM's presence in Europe and will help the Austrian brand maintain its leadership position. KTM recently overtook BMW and the acquisition will help KTM create a second brand in the region. KTM is expected to gain synergies on technology, distribution and the economies of scale from this acquisition. Husqvarna and KTM compete in the European market on price, but these brands have different attributes. KTM may utilise its own aggregates like the engines and vehicle platform to develop new Husqvarna motorcycles in the future, said people close to the development. Husqvarna which had touched peak volumes of 15,000 a few years back, posted 15.7% growth in 2012 by selling close to 10, 751 units, but it still continues to be loss making. When contacted Rajiv Bajaj, MD, Bajaj Auto confirmed the development but declined to give more details on the acquisition. The rationale behind the buyout, Bajaj reasoned: "In Jack Trout and Al Ries's book of 22 immutable laws of marketing, the 8th chapter on the law of duality -says - in the long run, every market becomes a two horse race. As the market matures, top two players end up with 80% of market share. Thus with two strong brands KTM and Husqvarna - KTM places itself in a powerful position to defend its world leadership in off-ro ad and premium motorcycles." And just like KTM products, Bajaj Auto's Chakan plant could possibly become hub for exports for products below 400 cc, said Bajaj. ""Just like how KTM gained from the low cost of manufacturing from India, Husqvarna too can reduce cost by manufacturing products out of Bajaj Auto's Chakan plant in Maharashtra."" Bajaj added. Surjit Arora, auto analyst with Prabhudas Lilladher said, ""From a strategic point of view, the acquisition is a good fit. The Husqvarna products will further expand portfolio and enhance Bajaj's image of a sporty bike maker. It is difficult to comment on specif ic financials, but today KTM is a profit making company, going ahead it will boost earning per share of Bajaj Auto in the next two to three years."" Experts say, post the acquisition in 2008, BMW has put in a significant amount of investment in production and future product portfolio. In fact some of BMW engineers had moved to Husqvarna's R&D set up. Both these companies have similar products, so synergies will be better utilised. KTM gets technology, distribution and product portfolio and it can further enhance the market share. ""Bajaj Auto's future product may also get a boost. One has already seen the positive rub-off effect of KTM technology on Bajaj Auto's product, this will further enhance Bajaj's technology and one may see positive benefits of Husqvarna technology on Bajaj Auto's products,"" said an industry analyst who did not wish to be named. The entity is currently managed out of Varesa, Italy. Husqvarna has a range of off-road, supermoto and street bikes, including the Nuda 900 and TR650 range of street bikes, SMR 630, 511, 125 and SMS 125 range of supermoto bikes, the TXC cross country range, the TE Enduro range as well as a mini cross range. After acquisition, BMW spent good amount to develop and improve the Husqvarna brand. Many new road bikes and off-road bikes were introduced to replace the older line-up. BMW developed bikes like the Nuda 900 which was an extremely aggressive and powerful motorcycle. via Technology - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNEGxchJPdjS2SXC90E2gsNUhH9HoQ&url=http://economictimes.indiatimes.com/news/news-by-industry/auto/two-wheelers/ktm-promoter-stefan-pierers-pierer-industrie-buys-out-100-stake-in-bmws-husqvarna-brand/articleshow/18276284.cms

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