Harley Davidson to buy MV Augusta

Harley Davidson to buy MV Augusta of Italy

Harley-Davidson, the iconic American motorcycle manufacturer, has inked a pact for the buyout of Italian premium sports motorcycle maker MV Agusta Group (MVAG). MV Agusta Group is a privately held company, with the Castiglioni family owning 95 percent of MVAG shares. The acquisition is expected to close in several weeks, pending the satisfaction of contingencies and receipt of regulatory approvals.

Harley-Davidson will pocket 100 percent of MV Agusta Group shares for total consideration of approximately 70 million euros, which is equivalent to around $109 million.

The Harley-Ausgusta deal would also mean the satisfaction of existing debts of approximately 45 million euros ($70 million). The deal will also mean that it would provide for a contingent payment to Claudio Castiglioni in 2016, if certain financial targets are met.

Harley-Davidson is expected to finance the transaction primarily through euro-denominated debt. Post-buy out, Harley-Davidson is likely to continue to operate MV Agusta Group from its headquarters based at Varese in Italy. The first priority will be to appoint a leadership team to include a new Managing Director and to resume the manufacture of current models.

MV Agusta Group has two families of motorcycles: a line of exclusive, premium, high-performance sport motorcycles sold under the MV Agusta brand; and a line of lightweight motorcycles sold under the Cagiva brand. MV Agusta’s F4-R motorcycle, powered by a 1078cc in-line four-cylinder liquid cooled engine, is rated at 190 hp. The MV Agusta and Cagiva brands are well-known and highly regarded in Europe.

MVAG currently sells its two wheelers through about 500 dealers worldwide. Most of them, incidentally, are in Europe. Though MV Augusta had been seeing good sales having shipped 5,819 motorcycles in 2007, this year it ran into financial trouble and had to slam the brakes on its production facilities. The agreement with Harley Davidson has followed this.