Back in February I did a little profile on Ducati based on an article in Cycle News. You may recall that Harley-Davidson made a run at buying Ducati late last year, but the move was quashed by the investment group Investindustrial, which owned a significant, but not controlling, portion of Ducati stock.
H-D has since satisfied their craving for a European marque by acquiring MV Agusta. And now it appears that Investindustrial has insulated themselves from foreign management by putting together a larger private investment group, Performance Motorcycles S.p.A., which consists of shareholders Investindustrial, BS Investimenti and Hospitals of Ontario Pension Plan (HOPP). According to the press release:
The three shareholders owned a combined 30% share of the Italian OEM in February when they announced plans to buy out the rest of the company for 1.70 euros a share, an arrangement worth 390.8 million euros (US$579 million). At the time, Investindustrial held a 15.6% share, HOPP 7.4% and BS Investimenti 7%, and stock in Ducati Motor Holding traded at 1.40 euros per share. Stock in Ducati Motor Holding S.p.A. has gone up in value by 16.4% since three key shareholders announced plans to buy out the company. Stock in Ducati Motor Holding S.p.A. has gone up in value by 16.4% since three key shareholders announced plans to buy out the company.
Under the Performance Motorcycles banner, the three shareholders currently own a combined 86.7% of Ducati while the value of shares has increased to 1.63 euros.
Unlike American and Japanese motorcycle companies, Ducati’s sales continue to grow, as do MV Agusta’s. Perhaps the world is growing tired of the technically perfect sameness that is the Japanese motorcycle industry, and is looking for something with a bit more personality. I know I am (even though I still want a Kawasaki Versys.)
According to this Forbes.com report, Harley-Davidson is in an advanced stage of talks to buy part or all of Italian motorcycle company MV Agusta. Why would HD buy an Italian sportbike company when they already have Buell?
Because big companies have to grow sales – year-over-year, quarter-over-quarter – always growing. When sales slow (as they have in the motorcycle market for the past year or so) there are only two things you can do:
- Invest in developing new products or new markets for your existing products (both of which take time)
- Buy customers (and sales) via acquisition
When it comes to buying motorcycle companies, Italy is about the only place you can go. H-D flirted with buying Ducati last year but was rebuffed. We’ll see if this turns out differently.
Getting detailed financial info on motorcycle manufacturers is difficult. The Big Four Japanese are vertically-integrated conglomerates who make everything from bullet trains and ships to pianos and keyboards. They don’t usually break out motorcycle sales in their financials. Ditto for BMW – they don’t separate cars and motorcycles. The small companies – Ducati, Piaggio, etc. are often traded on foreign exchanges with limited disclosure rules or have large percentages of their stock held by private interests. US-based Harley-Davidson is about the only pure motorcycle manufacturer where we can track true financials. This makes it hard for someone like me to assess trends and get any real feel for what’s happening in terms of industry economics, so it’s really helpful when someone publishes inside data on a specific company.
Alan Cathcart had a brief writeup on Buell and Ducati in the January 23 issue of Cycle News that had some interesting data on Ducati. I record it here for future reference.
Outgoing Ducati President/CEO Federico Minoli engineered the talks between H-D and Ducati that had H-D looking seriously at acquiring the Italian marque in late 2007. The deal was squashed by the Bonomi family, who controls Ducati via a 30%-minus-one-share equity stake owned by their private equity firm Investindustrial.
According to Cathcart Ducati’s revenues for the first nine months of 2007 showed a 43% increase over the same period in 2006:
Financial info for Ducati – first nine months of the year.
|Data from the January 23, 2008 issue of Cycle News.
H-D’s numbers have gone in the opposite direction, with sales mirroring the overall slump in the US economy and projected 2008 numbers being even worse. Interestingly, the two companies are apparently still talking and a future merger is not out of the question. As we have noted here before, big companies need to get bigger in order to remain competitive, and consolidation is the natural path in all industries. Big companies also have trouble innovating, and tend toward buying up innovation rather than developing it on their own. In the end this reduces overall choice in the marketplace, providing us – the riding public – with largely identical machines that are just branded differently.