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Exclusive: Bajaj, KTM parent firm restart talks on stake transfer

Bajaj Auto holds 48% in the Austrian bike maker. The discussions are being held between Bajaj Auto International Holding BV, the Netherlands-based subsidiary, and Pierer Industrie AG, the parent company of Pierer Mobility AG.

November 30, 2020 / 09:11 AM IST
 
 
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Bajaj Auto and partner KTM have restarted talks on transferring the 48 percent stake held by the Indian company in the Austrian bike maker back to its holding entity.

Bajaj Auto’s 48 percent equity, along with the 51.7 percent stake held by Pierer Mobility AG, make up the shareholding of KTM AG, the legal entity that is responsible for making products under its own brand, Husqvarna and GasGas brands.

KTM Group and Bajaj Auto are holding discussions to transfer the 48 percent stake of Bajaj Auto in KTM AG to the listed company Pierer Mobility AG. The discussions are being held between Bajaj Auto International Holding BV, the Netherlands-based subsidiary, and Pierer Industrie AG, the parent company of Pierer Mobility AG.

Although finer details of the proposed realignment of the partnership has not been shared by either companies, sources say that this would kick-start a new chapter in the 13-year-old partnership that has so far seen joint design and development of products, common use of manufacturing facility, overseas distribution pact and joint marketing and sales.

The two companies had held the same discussions in March 2019, with the transaction decision targeted to be made in the second quarter of the same year. But less than three months later, both companies aborted the plan for unspecified reasons.

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“Pierer Mobility AG was informed by Pierer Industrie AG and Bajaj that they have restarted discussions on assessing the possibility of transferring Bajaj's 48 percent stake in KTM AG to Pierer Mobility AG, with the Pierer Group continuing to retain the controlling majority over Pierer Mobility AG”, a statement from Pierer Mobility AG said.

What is different this time is the proposal to make PTW Holding AG, a newly formed entity by KTM, the 60-percent stake holder in Pierer Mobility AG. This translates to transferring the said 60 percent stake from Pierer Industrie AG to PTW Holding.

“Pierer Industrie AG and Bajaj will now evaluate the proposal in detail,” the statement further added.

The authorised capital enables a capital increase of up to 50 percent of the existing share capital. After the transaction, the stake of Pierer Mobility AG in KTM AG will increase from the current 51.7 percent to approximately 99.7 percent, the statement added.

KTM increases 2020 forecast

The announcement of restarting discussions of stake transfer comes less than two months after the Austrian bike maker increased the forecast for the second half of 2020, following sustained high demand for all brands including e-bikes.

The management board of Pierer Mobility AG decided to increase the sales forecast published at the end of August 2020 for the second half of 2020 to over € 850 million (previously € 800 million). Around 64 percent of KTM’s revenues come from Europe, followed by North America, and Mexico with 17 percent.

Riding on Bajaj

The partnership with Bajaj Auto made the Austrian company the world's biggest premium bike manufacturer, beating US heavyweight Harley-Davidson (in volumes) in 2018 and 2019.

Of the 90,331 motorcycles sold in the first half of 2020, 22 percent was manufactured and sold by Bajaj Auto in India and Indonesia. In return, Bajaj has benefited from technology sharing and becoming the sole manufacturer of KTM and Husqvarna bikes outside of Europe, with exports reaching the US, Japan and South Asia.

From worldwide volumes of 280,099 units clocked in 2019, KTM is expecting to sell around 400,000 two-wheelers in 2022. This will include nearly doubling of production at Bajaj Auto’s Chakan, Pune-based plant to 200,000 units, from around 108,000 units at present. This will include a mix of joint products (of KTM and Husqvarna bands) and KTM products distributed by Bajaj on a licence fee model.

The two companies have also started work on electric two-wheelers. The first of such e-bikes having power range between 3 and 10 kW (48 volts) will roll off the Chakan production line. The platform will support various product variants under the brand of both the partners.

KTM is developing a 4kW electric scooter under the Husqvarna brand whose market launch is expected to take place in 2021. This will be followed by the launch of Husqvarna E-Pilen, a 4kW/10kW, fully electric motorcycle with modular battery system. The Husqvarna E-Pilen is expected to be launch-ready in 2022.

 
Swaraj Baggonkar
first published: Nov 30, 2020 09:11 am

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