Royal Enfield’s parent, Eicher close to buying Ducati at $2 billion (INR 12,800 crore)
India's Eicher Motors, which is parent to Royal Enfield is very close to buying Ducati from Volkswagen.
It has been a quite a while since the first reports about VW planning to sell their premium two wheeler brand Ducati emerged. Many Indian names have been linked as interested entities, including Bajaj, Hero, and Royal Enfield. Even international brands like Harley Davidson and some names from China were interested.
As per a new report from Economic Times, Royal Enfield is the one which is the closest on making the final cut. RE’s parent company, Eicher Motors is close to submitting a bid amounting to $1.8 – 2 billion (approx. INR 12,800 crore) later this month.
Eicher Royal Enfield are the only Asian contenders who still remain in the race to buy Ducati. Sources closely following the deal, say that Eicher is currently sorting out financing and structuring terms. They are also in talks with banks the world over.
Though it is Volkswagen which is the parent, it is Audi AG which is going to go through with the deal. Audi has been working with investment bank Evercore to sell brand Ducati. They have managed to value the brand at €1.5 billion ($1.8 billion). This amount is about 15 times Ducati’s EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) earnings of $100 million.
Earlier this week, Reuters had revealed that it will take quite a few months before Ducati is handed over to the new buyer. This is because of Union opposing the sale. “Labour leaders at VW, who hold half the seats on the 20-member board, have strongly opposed a sale regardless of price,” revealed Reuters.
“There are still differences between VW and Audi that need to be resolved and the unions are far from backing the sale. At this stage it is highly unlikely that negotiations will be resumed this year,” added a source.
However, it seems Royal Enfield is the front-runner to buy Ducati. If it does go through, this will be a huge deal for the Indian auto industry. Some of the Indian two wheeler companies who are have tied up with foreign brands are – Bajaj – KTM, Bajaj – Triumph, TVS – BMW; and hopefully very soon – Royal Enfield – Ducati.