While Eicher Motors is preparing to make a binding bid offer of nearly $1.8-2 billion for Italian sports bike Ducati, it may take a while before the deal can come through as resistance from trade unions and other internal issues within the company may delay the whole process.
Ducati is wholly controlled by Volkswagen group's luxury brand Audi. As per several reports, Union leaders who hold a significant number of seats on the supervisory Board of the parent company are said to be opposing the move of its sale.
Also, there is alleged disagreement over several issues between Audi and the parent company. The matter has reached such a stage that Volkswagen has told the bidders to hold off from making binding bids, reveals one of the reports by an international news agency on Monday.
Eicher Motors, the only one from Asia among the five-six companies in the fray, is currently finalising financing terms with a few banks and consulting companies ahead of the deadline this month.
Earlier this month Volkswagen group, which has been trying to come out of the emissions scandal, had put Ducati on the block for around euro 1.5 billion, valuing it at 14-15 times its Ebitda, or operating profit.
Bajaj Auto-KTM combine and Hero MotoCorp were the other two Indian companies said to be interested in Ducati. While Bajaj Auto's Rajiv Bajaj later said that Ducati did not fit in their scheme of things and instead tied up with Triumph Motorcycles, there has been no word from Hero MotorCorp on it so far.
Asked whether $ 1.8- 2 billion is the right price for making a binding bid, automobile sector analyst Abdul Majeed said there is not much one can do as far as pricing is concerned as there are several competitors in the race.
"Raising money should not be a challenge for Eicher Motors. What is more important is that there should be clear business strategy towards acquisition and how it should play out. Most of the joint ventures fail on that front," said Majeed.
According to an analyst, if Eicher-Ducati deal goes through, then it may jump into competition with Bajaj-Triumph and TVS-BMW, which are the other two major joint ventures between an Indian company and global iconic brand in bike space.
Volkswagen, Ducati, Royal Enfield and Eicher Motors did not respond to emails seeking comment.
EXPENSIVE REV-UP
- Eicher is currently finalising financing terms with a few banks and consulting companies ahead of deadline this month
- There is not much one can do as far as price is concerned as there are several competitors in the race
