In a strategic move to expand its global footprint in the premium motorcycle segment, India's Bajaj Auto has announced plans to acquire a controlling stake in Austrian motorcycle manufacturer KTM AG. This acquisition is facilitated through Bajaj's Netherlands-based subsidiary, Bajaj Auto International Holdings BV (BAIHBV), and involves an €800 million (approximately Rs 7,765 crore) funding package aimed at stabilizing KTM's financial position and ensuring its operational continuity.
Financial Structure of the Deal
The €800 million funding package comprises:
A €450 million (Rs 4,365 crore) secured term loan extended directly to KTM AG.
A €150 million (Rs 1,455 crore) subscription to convertible bonds issued by Pierer Bajaj AG (PBAG), KTM's parent entity.
An earlier infusion of €200 million (Rs 1,945 crore) as shareholder debt by BAIHBV.
This financial intervention is part of a court-approved debt restructuring plan in Austria, which requires KTM to settle 30% of creditor claims by May 23, 2025, to avoid insolvency proceedings.
Strategic Implications
Bajaj Auto's increased investment will transition its role from a minority stakeholder to a majority owner in KTM's parent structure. Currently holding a 37.5% indirect stake through PBAG and Pierer Mobility AG, Bajaj aims to acquire a controlling interest in PBAG, pending regulatory approvals in Austria.
This move is expected to:
Enhance Bajaj's position in the global premium motorcycle market.
Strengthen the existing partnership between Bajaj and KTM, which includes joint product development and manufacturing in India.
Facilitate the revival of KTM's operations and financial health.
Market Reaction
Following the announcement, Bajaj Auto's shares experienced a 1% increase, reflecting investor confidence in the company's strategic direction and commitment to global expansion.
Conclusion
Bajaj Auto's planned acquisition of a controlling stake in KTM AG represents a significant step in its global expansion strategy. The €800 million funding package not only aims to rescue KTM from financial distress but also positions Bajaj as a key player in the international premium motorcycle market. Pending regulatory approvals, this move could redefine the dynamics of the global two-wheeler industry.
Written by Indira Securities SEBI Registered with 30 plus years of experience in Stock Market!!!