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April 17, 2012, 3:28 p.m. ET.
Audi Nears Ducati Purchase
By CHRISTOPH RAUWALD
Volkswagen AG's Audi unit is preparing to buy Italian motorcycle maker Ducati Motor Holding SpA for around $1.1 billion including debt, according to people familiar with the matter, a move that would intensify its rivalry with BMW AG and expand the luxury-auto maker's offerings.
Audi entered the talks with Ducati's majority owner, Italian investment company Investindustrial, aiming for a full takeover, according to these people. The deal is due to be approved by Volkswagen's supervisory board at a meeting in Hamburg on Wednesday, they said.
VW's board is set to act on a Ducati deal Wednesday. Above, a Ducati 848 EVO Corse SE for sale in Rome.
Spokesmen for Audi and Investindustrial declined to comment.
Volkswagen aims to become the world's largest auto maker by volume in 2018 and is investing heavily to boost its presence across the globe. It posted record vehicle sales and profits last year and has significant muscle to finance its expansion plan with €17 billion in net liquidity as of Dec. 31, 2011.
The Wolfsburg-based auto maker took over truck makers Scania AB and MAN in recent years to increase its footprint in commercial vehicles and will now enter the high-performance motorcycle business through the Ducati acquisition.
The move into trucks and motorcycles are widely seen as the brainchild of VW's influential Supervisory Board Chairman and former Chief Executive Ferdinand Piech, who has voiced admiration for Ducati in the past and reportedly owns one of its motor bikes.
The rapid expansion has sparked concerns about the growing industrial complexity which Volkswagen's management has to master at a time when competition for its car business is heating up amid a fragile economic environment.
Ducati's owners, which include BS Private Equity SpA and Hospitals of Ontario Pension Plan, had considered an initial public offering of stock to take advantage of the world-wide boom in demand for luxury vehicles.
Ducati's owners were hoping to raise around €1 billion ($1.3 billion) from selling the whole business, according to previous statements.
Ducati reported net profit of €32.5 million in 2011 on revenue of €478.5 million as it sold 42,016 vehicles, according to figures provided by the motorcycle maker. Earnings before interest, taxes, depreciation and amortization were €87.5 million.
By adding a motor-bike operation, VW's Audi brand, a key earnings contributor, will establish a structure similar to rival BMW. The world's best-selling luxury-car maker ahead of Audi reported record first-quarter sales last week of its name-brand and Husqvarna motorcycles, up 5.5% at 24,373 units. The group's overall vehicle sales rose 11%.
Ducati's upscale motorcycles, which include models named Street Fighter, Monster and Diavel, range in price from about €8,000 to €30,000 in Europe.
The Bologna, Italy, company counts professional racer Valentino Rossi, movie star Tom Cruise and movie director David Cronenberg among its customers.
—Gilles Castonguay contributed to this article.
April 17, 2012, 3:28 p.m. ET.
Audi Nears Ducati Purchase
By CHRISTOPH RAUWALD
Volkswagen AG's Audi unit is preparing to buy Italian motorcycle maker Ducati Motor Holding SpA for around $1.1 billion including debt, according to people familiar with the matter, a move that would intensify its rivalry with BMW AG and expand the luxury-auto maker's offerings.
Audi entered the talks with Ducati's majority owner, Italian investment company Investindustrial, aiming for a full takeover, according to these people. The deal is due to be approved by Volkswagen's supervisory board at a meeting in Hamburg on Wednesday, they said.
VW's board is set to act on a Ducati deal Wednesday. Above, a Ducati 848 EVO Corse SE for sale in Rome.
Spokesmen for Audi and Investindustrial declined to comment.
Volkswagen aims to become the world's largest auto maker by volume in 2018 and is investing heavily to boost its presence across the globe. It posted record vehicle sales and profits last year and has significant muscle to finance its expansion plan with €17 billion in net liquidity as of Dec. 31, 2011.
The Wolfsburg-based auto maker took over truck makers Scania AB and MAN in recent years to increase its footprint in commercial vehicles and will now enter the high-performance motorcycle business through the Ducati acquisition.
The move into trucks and motorcycles are widely seen as the brainchild of VW's influential Supervisory Board Chairman and former Chief Executive Ferdinand Piech, who has voiced admiration for Ducati in the past and reportedly owns one of its motor bikes.
The rapid expansion has sparked concerns about the growing industrial complexity which Volkswagen's management has to master at a time when competition for its car business is heating up amid a fragile economic environment.
Ducati's owners, which include BS Private Equity SpA and Hospitals of Ontario Pension Plan, had considered an initial public offering of stock to take advantage of the world-wide boom in demand for luxury vehicles.
Ducati's owners were hoping to raise around €1 billion ($1.3 billion) from selling the whole business, according to previous statements.
Ducati reported net profit of €32.5 million in 2011 on revenue of €478.5 million as it sold 42,016 vehicles, according to figures provided by the motorcycle maker. Earnings before interest, taxes, depreciation and amortization were €87.5 million.
By adding a motor-bike operation, VW's Audi brand, a key earnings contributor, will establish a structure similar to rival BMW. The world's best-selling luxury-car maker ahead of Audi reported record first-quarter sales last week of its name-brand and Husqvarna motorcycles, up 5.5% at 24,373 units. The group's overall vehicle sales rose 11%.
Ducati's upscale motorcycles, which include models named Street Fighter, Monster and Diavel, range in price from about €8,000 to €30,000 in Europe.
The Bologna, Italy, company counts professional racer Valentino Rossi, movie star Tom Cruise and movie director David Cronenberg among its customers.
—Gilles Castonguay contributed to this article.
