American Motorcycle Dealer AMD 216 July 2017

™ R OU NOW IN 2 Y 5 EA t R h T H E # 1 B U S I N E S S M A G A Z I N E F O R T H E A M E R I C A N V- T W I N A N D C U S T O M M O T O R C Y C L E PA R T S I N D U S T RY Harley to bid for Ducati? espected London based business news specialist Reuters has thrown a giant rock into our pond with a June report that Harley-Davidson is actively mulling a bid to buy Italian sportsbike specialist Ducati. Under the headline “Harley-Davidson enters race to buy Italian rival Ducati” the report, by Pamela Barbaglia, for Reuters London, said that “U.S. motorcycle maker Harley-Davidson is lining up a takeover bid for Italian rival Ducati, in a deal that could be worth up to 1.5 billion euros ($1.67 billion), sources told Reuters” - those sources are also reporting that Harley has indeed decided to explore their options, “with investment banker Goldman Sachs hired to work on the deal.” Tentative bids are expected during July. Barbaglia goes on to say that “Ducati was on the wish list of private equity funds KKR (themselves no strangers to rumors connecting them with plans to buy Harley), Bain Capital and Permira, which are all working on the deal - said the sources, who declined to be identified as the process is private.” The only response that the report quotes is one in an e-mail from a spokesman for VW group’s works R RMOT TE council: "Ducati is a jewel, the sale of which is not supported by the labor representatives on Volkswagen's supervisory board" adding that "Harley-Davidson is miles behind Ducati in technology terms." Volkswagen's powerful labor unions control half the seats on the carmaker's 20-strong supervisory board. VAG have retained investment Goldman Sachs hired for deal that may cost 15 times Ducati’s EBITDA boutique Evercore, who are known to have sent out information packages to a number of potential suitors including Ducati's previous owner Investindustrial, who took a stake in Ducati before the financial crisis, subsequently taking control of the business before selling it to Audi in 2012. The report says that Investindustrial is now looking to compete with heavyweight private equity firms and large industry players to regain control. Barbaglia says that Volkswagen, Audi, Harley-Davidson, KKR and Bain Capital declined to comment and that Bajaj, Investindustrial and Permira were not immediately available at the time the report was published. Ducati last year reported revenues of 593 million euros (approximately $677m). Barbaglia’s sources are reported to have said that Volkswagen hopes to raise between 1.4 billion and 1.5 billion euros (up to $1.7Bn) from the sale of Ducati, valuing it at 14-15 times its earnings before interest, taxes, depreciation and amortization (EBITDA) of about 100 million euros. The German car maker wants a valuation that reflects trading multiples of similar trophy assets in the automotive industry, such as Italian car maker Ferrari, which trades at almost 30 times its forward earnings. Indian motorcycle firm Hero MotoCorp (the company that bought a $25m/49.4 percent stake in Erik Buell Racing in 2013) and its rival TVS Motor Company are said to have also initially expressed interest in Ducati, but were put off by its price tag and decided to walk away, and others, such as BMW, Honda and Suzuki, who were also scared off. See also Comment, pages 4 and 6. ‘Thugnificent’ by Chaos Cycle Chaos Cycle/George Stinsman's classy handcrafted 'Thugnificent' was a top 15 finisher at the 2016 AMD World Championship - see pages 31 - 33 JULY 2017 ISSUE #216 FREE WITH THIS ISSUE WRECKING CREW FOR X GAMES TUCKER ROCKY/ BIKER'S CHOICE PRODUCT EXTRA