Saturday, April 13, 2024


Taking due note that we are entering the summer’s media silly season where solid stories are thin on the ground, Reuters business news agency has claimed Harley-Davidson is the latest contender preparing a takeover bid for Ducati, citing unidentified sources. BDN financial editor Roger Willis attempts to sort fantasy from reality.

Hard facts relating to the future of Ducati are difficult to find. After months of speculation it’s generally accepted that Volkswagen Group is looking at disposal of the Italian motorcycle manufacturer, and has approached potential suitors. However, VW has never confirmed that a final decision to proceed with an exit has been made. Most of what we are told is based on nothing more than semi-informed gossip and guesswork from people who are allegedly “familiar with the matter”.

This latest Reuters epistle summarises divergent rumours. It acknowledges what savvy investment commentators accept is the most likely among them. Leading private equity firms are exploring opportunities to buy Ducati. On this occasion, Reuters named KKR, Bain Capital and Permira. CVC Capital Partners had been mentioned previously.

A swathe of Indian bike manufacturers that were reportedly lusting after Ducati — Hero MotoCorp, TVS Motor and Royal Enfield parent Eicher — have now been dropped from contention, on the basis that the price is too steep. According to Reuters, the tag will be about £1.3bn, based on two and a half times Ducati’s 2016 revenue of £523m and about 15 times an £88m operating profit.

Additional morsels thrown into the mix included continuing interest from India’s Bajaj Auto, a complete lack of interest from BMW and opposition to disposal by VW’s trade unions. Honda and Suzuki supposedly also considered and then rejected bid participation.

Returning to Harley-Davidson’s emergence as a prime suspect, Reuters said one of its famously anonymous sources revealed that merchant bank Goldman Sachs has been appointed to act for Harley. But credibility of this account began to expire through lack of obvious background detail.

Specifically, Reuters failed to recall that Harley-Davidson has owned a prestige Italian sporting motorcycle brand before, with deleterious consequences. It threw away in excess of £200m in 2008 on acquiring and refinancing MV Agusta, only to stagger off with empty pockets just two years later. Harley’s large institutional investors will have longer memories and take a very dim view of any repeat escapade. Harley supremo Matt Levatich will remember the gruesome MV Agusta debacle with remorse too, as he was the unfortunate executive despatched to sort it out.  


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