Royal Enfield’s parent Eicher Motors to bid $1.8 billion for Ducati – Report

Dhruv

Dhruv Saxena, Mechanical engineer trying to find his place in the world of automobile journalism.

According to a report by the Economic Times, Eicher Motors, the owners of Royal Enfield, is set to bid for the VW owned Ducati. The company will make a binding offer for the Italian two wheeler marquee of around $1.8-2.0 billion.

Royal Enfield to buy Ducati for $1.8 billion
The owner of Royal Enfield, Eicher Motors, has emerged as a front runner to acquire Ducati from Volkswagen.

Eicher Motors (Royal Enfield) first emerged as a possible suitor for the purchase of Ducati in April. However, CEO Siddhartha Lal, based on his previous remarks, seemed uninterested in making a bid. However, according to the report, sources claim Eicher is currently finalising the financing and structuring aspects with a clutch of global banks and consulting companies ahead of the month-end deadline.

In April, it was reported that the embattled auto major Volkswagen was looking to offload Ducati for EUR 1.5 billion. The company has been working closely with boutique investment bank Evercore to work out the sale of Ducati for EUR 1.5 billion, valuing it at 14-15 times its earnings before interest, taxes, depreciation and amortisation (EBITDA) of about EUR 100 million. The deal is part of the consolidation process VW decided to undertake following the emissions scandal.

In the past, Harley Davidson, Suzuki and Indian companies like Hero MotoCorp and Bajaj, have all been linked with the purchase of Ducati from VW owned Audi. However, as it stands, Eicher Motors is the only Indian company left in the fray. The report also lists Bain, PAI Partners, Italy’s Benetton family and former owners Investindustrial as companies currently in the race for the acquisition of Ducati.

Ducati to be sold to Royal Enfield
VW owned Audi acquired Ducati in April 2012. However, following the ‘dieselgate’ emissions scandal, the company is looking to offload non-core assets as part of a strategic overhaul.

The process is facing delays due to internal rifts and opposition of the sale by Volkswagen’s German trade union. The parties have been asked to hold off making a binding bid, according to the report. The board is due to meet on September 29, and the media expects to gain more clarity regarding the sale of Ducati to Eicher Motors or other suitors then.

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[source – Economic Times]

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