Europe's largest two wheeler manufacturer (in volumes) KTM has acquired 100% stake in motorcycle brand - Husqvarna, which was a cult brand of German bike major BMW Motorrad till date. For your information, Indian two-wheeler major Bajaj Auto holds 47% stake in KTM. In a press statement, BMW Group confirmed stating it has signed a purchase agreement with Pierer Industrie 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.
Some source confirmed that Stefan Pierer, CEO of KTM has acquired 100% stake in Husqvarna, in his personal capacity from BMW. Husqvarna, which is a 100 year-old Swedish brand will eventually be transferred to KTM by Pierer with the deal finalized last week. By buying Husqvarna, KTM will expand its presence in Europe and it will also 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.
Husqvarna, which had sold the maximum of 15,000 units a few years back, posted 15.7% growth in 2012 by selling close to 10, 751 units, however 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-road 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 specific 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.""
BMW has invest in a significant amount in production and future product portfolio of Husqvarna in 2008. 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.