Bajaj Auto Looking To Move KTM Stake To Its Parent Company
Bajaj Auto will first transfer its 48 percent stake in KTM AG to KTM Industries AG, which will then issue shares to Bajaj Auto.
Bajaj Auto Ltd. is in talks to swap its entire stake in Austrian motorcycle maker KTM AG for shares in its parent KTM Industries AG, according to an exchange filing. The deal is being currently evaluated by Bajaj and Pierer Industrie AG, which is the majority shareholder of the parent KTM Industries.
Currently, Pierer owns 62 percent stake in the parent KTM Industries—which itself owns 51.7 percent in KTM AG. Bajaj, through its wholly-owned subsidiary Bajaj Auto International Holdings BV, has 48 percent stake in KTM AG.
As per the proposal, Bajaj Auto will first transfer its 48 percent stake in KTM AG to the listed KTM Industries AG. The parent company will issue shares to Bajaj in place of the current shareholding.
If Pierer Industrie AG and Bajaj decide to execute the transaction, KTM Industries AG will examine the legal and economic requirements and conditions of a capital increase by contribution in kind from the existing authorised capital.KTM Industries AG
The deal will allow Pierer to retain majority stake in the parent KTM Industries. If the transaction is executed, KTM Industries’ stake in KTM AG will go up to 99.7 percent from 51.7 percent currently.
The final decision on this reorganisation is expected to come by the end of June.
Bajaj Auto first bought stake in KTM back in 2007. Since then the company has invested a total of €198.1 million or Rs 1,219 crore, according to its annual report for the financial year 2017-18. The company valued this investment at close to Rs 2,529 crore as of FY18.
KTM Industries AG, is a listed entity which trades on the SIX Swiss Exchange. The share prices of KTM Industries closed trading on March 20 at €51.02 per share.
Considering Bajaj’s investment value and KTM Industries’ share price, Bajaj Auto might get close to 22 percent stake in KTM Industries, according to BloombergQuint’s calculations.
The manufacturing and distribution of the ‘KTM’ and ‘Husqvarna’ brands is done by KTM AG. Major markets include the North America, Western Europe, Australia, and Argentina. KTM Industries Group says it is the biggest European motorcycle producer and focuses on sport motorcycles and electro mobility.
KTM Industries generated most of its revenue from KTM AG. In the first half of 2018, KTM AG contributed nearly 87 percent of KTM Industries’ total revenue.