Harley To Buy Ktm?
HARLEY TO BUY KTM?
ROUNDUP
IN WHAT MAY SEEM THE most unlikely of marriages, Harley-Davidson and KTM are talking about tying the knot. Motor Company management has visited KTM’s factory in Mattighofen, Austria, and negotiations are reportedly taking place, with an alleged takeover to be announced at September’s Munich Show.
Although nothing is certain, both companies’ spokesmen admit to being intrigued by the possible merger.
“That would be an interesting mix, because it’s a product line that we don’t have,” said Harley-Davidson’s Steve Piehl. “But I’m not aware of anything pending right now.”
KTM USA’s Scot Harden was also optimistically ambiguous. “There are certain needs of both companies that could be met, mainly related to distribution,” he said. “But that’s all I can say.” KTM currently has 265 dealerships in the U.S., as opposed to 650 for Harley.
In the meantime, KTM has made a miraculous comeback from its bankruptcy in 1991, when Swiss venture capitalists Exantra and a group of KTM importers bought the company. Production has grown from 5600 bikes in ’92 to the current 26,000 units, with pretax profits of $12.7 million. Recently, management voted to invest $15 million in an adjoining factory that will up output to some 40,000 machines.
The investment needed to develop models like the street-oriented Duke and championship-winning four-stroke motocrossers was offset by partial stock flotation two years ago. Now, with KTM shares trading at a premium in the wake of the Harley rumors. Exantra and partners are likely to cash in their chips.
KTM could be appealing to Harley for several reasons, and not just for its offroad range. Harley could explore restructuring its European distribution using KTM importers, and it would be an opportunity to re-position Buell for entry into competition. The acquisition would also give Harley its own suspension maker, Dutch-based WP, which along with Husaberg is owned by the KTM Group.
KTM Chairman Stefan Pierer has stressed the need for a global partner to combat current Japanese sales supremacy. Though it may appear a union of opposites, Harley-Davidson’s marriage to KTM might well be a happy one. -Alan Cathcart
