Home News Ducati sale runs into Volkswagen Union speed bumps

Ducati sale runs into Volkswagen Union speed bumps

Ducati sale runs into Volkswagen Union speed bumps

The Volkswagen group has been under pressure to divest itself of seemingly non-core assets like Ducati in order to take care of the spillover of ‘dieselgate’ and future spends. And to all purposes it looked like the Ducati deal was a certainty, with an auction process handled by boutique investment bank Evercore bringing in a range of bidders from Harley-Davidson, Suzuki, two private equity firms and all three major Indian two-wheeler makers, i.e. Hero Motors, Bajaj Auto and Eicher Motors owned Royal Enfield.

In the process the asking figure of close to 1.5 billion Euros seems to have been digested by the bidders and the process of shortlisting the finalists was underway. However two events seem to have caused a delay in the process – with the German elections adding a hue of political overtones to the sale and the Volkswagen employees Union, who hold half the seats on the board, saying that a sale at any price was off the table.

As it is, the 1.5-billion Euro asking price is 15 times the annual EBITDA (earnings before interest, taxes, depreciation and amortisation) of around 100 million Euros.

While bidders have been asked to hold their offers, Siddharth Lal run Royal Enfield has announced its $1.8-billion bid for the brand that it hopes will open out the top end of the motorcycle segment above 800cc. Royal Enfield has been growing its stable and global product offering in the 350cc to 500cc segment, having launched new engines and frames like the 400cc Himalayan.

The final decision to sell the Audi mentored brand has to be taken by Volkswagen’s supervisory board by September 29. Italy’s Benetton family, U.S. automotive firm Polaris Industries and Ducati’s former owner Investindustrial also made it to the last stage of an auction in July, along with private equity funds Bain Capital and PAI Partners. Polaris already has a partnership with Eicher Motors in India, although their bid seems to be independent.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.