Bajaj Auto plans to acquire majority stake in Austrian bike maker KTM
With this, Bajaj will shift gears from being a dormant minority investor to a majority owner in KTM.
Bajaj Auto Ltd on Thursday said it intends to acquire a majority stake in financially troubled Austrian bike maker KTM through its wholly-owned subsidiary Bajaj Auto International Holdings BV, which has arranged a debt funding package of 800 million euros (about Rs 7,765 crore).
After post requisite approvals come through, Bajaj will shift gears from being a dormant minority investor to a majority owner in KTM, Bajaj Auto said in a statement.
The company will continue to accelerate KTM's business that is run out of India under the joint development programme, where it develops, makes and sells in India as well as exports to 80 countries across the KTM network, it added.
Bajaj Auto International Holdings BV (BAIHBV) has arranged a debt funding package of 800 million euros to enable the continuity of the KTM business by paying off the approved quota to the creditors in furtherance of KTM's debt restructuring with the approval of the competent Court in Austria, and infusing funds into the company to revive its operations and working capital cycle, the statement said.
"Of this total 800 million euro debt package, 200 million euros have already been infused into the company so far and the balance 600 million euros are being done now," the company added.
This twin move of taking ownership, subject to approvals and paring down debt by providing liquidity at a crucial stage, positions Bajaj Auto as a driving force in shaping the future of KTM, one of the major high performance motorcycle companies in the world, it added.
In November 2024, KTM AG and its subsidiaries, KTM Components GmbH and KTM F&E GmbH, entered into a self administrative restructuring process, prompted by acute liquidity challenges and inability to service spiralling debt and working capital constraints that stifled routine business operations.
"In connection with the planned change of control, BAIHBV intends to invoke the restructuring privilege provided for under the Austrian Takeover Act applicable to investments for the benefit of a distressed company," the statement said.
Prior to the transaction, Bajaj Auto through BAIHBV holds a 49.9% stake in its associate Pierer Bajaj AG (PBAG) in Austria. The remaining controlling stake in PBAG is held by Pierer Industrie AG, owned by entrepreneur Stefan Pierer.
PBAG holds a nearly 75% stake in its subsidiary, Pierer Mobility AG (PMAG), the holding company of KTM AG. Bajaj effectively holds 37.5% in PMAG/KTM, through the above chain, prior to this transaction.
KTM AG manufactures offroad and street motorcycles marketed under the marquee brands of KTM, Husqvarna and GASGAS. Bajaj Auto said upon receipt of regulatory approvals , it will initiate a revamp of the governance framework including reconstituting the board of KTM.
As part of the journey of turnaround, there will be a programme aimed at restoring momentum and competitive growth while driving the financial viability of the company. Potential partnerships and collaborations will be explored to build sustainable competitive advantage and long-term value creation, the company said.
"In effect therefore, the larger role of Bajaj in the future of the KTM business offers potential to unlock a triad of opportunity covering global growth, brand elevation, and technology leadership," the company said.