Audi to buy motorcycle maker Ducati, gain access to light-weight engine technolgy
Chris Reiter
April 18, 2012 - 2:49 pm ET
BERLIN (Bloomberg) -- Volkswagen AG's Audi will buy Italian motorcycle maker Ducati Motor Holding S.p.A. to add luxury two-wheelers ridden by celebrities such as Brad Pitt to the German automaker's expanding brand portfolio.
The deal also gives Audi access to Ducati's light-weight engine technology, a move expected to play a strategic role as automakers face more stringent fuel-economy standards worldwide.
The VW and Audi supervisory boards approved the purchase today and aim to complete the transaction as quickly as possible following regulatory approval, Audi said in a statement.
The VW unit will pay owner Investindustrial SpA about 860 million euros ($1.1 billion), including debt of around 155 million euros, for the Bologna, Italy-based company, two people familiar with the matter said today, declining to be identified because the companies are not publicly disclosing the price.
VW Chairman Ferdinand Piech, who turned 75 yesterday, has long coveted the brand.
He publicly expressed interest in buying Ducati in April 2008 before eventually losing out to Investindustrial.
The purchase will make Ducati the 11th brand in VW's portfolio, alongside super-car marques Lamborghini and Bugatti and heavy-duty truck manufacturers Scania AB and MAN SE.
"Ducati is a strong brand in a very specialized segment -- a bit like Lamborghini," said Juergen Pieper, an analyst with Bankhaus Metzler in Frankfurt. "It'll give Audi a bit of a marketing boost and it's very profitable, but you still have to ask whether there's not better use for $1 billion."
The deal will also aid Ingolstadt, Germany-based Audi in its competition with BMW AG, which makes BMW and Husqvarna motorcycles, as they vie for the lead in luxury vehicles.
Deal value
Ducati, which last year sold about 42,000 motorcycles such as the $28,000 Superbike 1199 Panigale S Tricolore, posted earnings before interest, taxes, depreciation and amortization to 93 million euros in 2011, a person familiar with the financial figures said March 13.
Audi is paying about 7.5 times Ebitda, minus debt, for the Italian motorcycle maker. Investindustrial, a private equity firm based in Milan, is earning three times the money it invested in the deal, one of the people said.
Ducati's revenue last year rose 20 percent to 480 million euros, giving it a profit margin of about 19 percent. Audi's operating profit was the equivalent of 12.1 percent of sales.
"Ducati is known worldwide as a premium brand among motorcycle manufacturers and has a long tradition of building sport motorcycles," Audi CEO Rupert Stadler said in the statement. "It has great expertise in high- performance engines and lightweight construction."
Porsche integration
Volkswagen last year sold 8.36 million vehicles, generating 159 billion euros in revenue.
VW, which also plans to integrate the Porsche car brand, had net liquidity of 17 billion euros at the end of 2011, according to its annual report.
The Ducati deal marks an entry into the motorcycle business for VW and another asset in Italy after buying Lamborghini and Italdesign Giugiaro SpA.
Piech has also expressed interest in the past in Fiat SpA's Alfa Romeo brand. Hero MotoCorp Ltd., India's biggest motorcycle maker, had also expressed interest in Ducati after Milan-based Investindustrial made it known in February that it planned to sell the company.
Ducati, which was founded in 1926, sells the Superbike, Monster, Streetfighter, Hypermotard, Multistrada and the new Diavel models in 65 countries.
"Ducati has thrived with us as a result of the intensive industrial turnaround and the commercial push into new, fast- growing markets," Andrea Bonomi, Investindustrial chairman, said in a statement. "We are convinced that the company will continue to provide a bright and rewarding future to its customers and employees in the very capable hands of Audi."
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