In a landmark move set to reshape the global motorcycle industry, India’s Bajaj Auto has announced its plan to acquire a controlling stake in Austrian motorcycle manufacturer KTM AG. This strategic acquisition involves a significant financial commitment of €800 million (approximately ₹7,765 crore), with a fresh infusion of €600 million aimed at reviving KTM’s operations and solidifying Bajaj’s position in the international two-wheeler market.
Background of the Bajaj-KTM Partnership
Bajaj Auto’s association with KTM dates back to 2007 when it acquired a 14.5% stake in the Austrian company. Over the years, this partnership has flourished, leading to the joint development and manufacturing of several successful motorcycle models. Bajaj’s manufacturing prowess, combined with KTM’s engineering excellence, resulted in the production of popular models like the KTM Duke and RC series, which have been well-received in markets worldwide.
Details of the Acquisition
The acquisition will be executed through Bajaj Auto International Holdings BV (BAIHBV), Bajaj’s wholly-owned Netherlands-based subsidiary. BAIHBV currently holds a 49.9% stake in Pierer Bajaj AG (PBAG), an Austrian company that owns approximately 75% of Pierer Mobility AG, the parent company of KTM AG. With this deal, Bajaj aims to transition from a minority stakeholder to the majority owner of KTM, marking a significant shift in its role within the company.
The €800 million funding package includes:
- €450 million (₹4,365 crore) as a secured term loan to KTM AG
- €150 million (₹1,455 crore) via convertible bonds in Pierer Bajaj AG
- €200 million (₹1,945 crore) previously infused as shareholder debt
These funds are intended to support KTM’s ongoing debt restructuring efforts, ensuring operational continuity and aiding in the company’s financial recovery.
Implications for the Global Motorcycle Market
This acquisition is poised to have far-reaching implications for the global motorcycle industry. For Bajaj Auto, gaining majority control of KTM represents a strategic move to enhance its presence in the premium motorcycle segment and expand its footprint in international markets. The deal also underscores Bajaj’s commitment to innovation and its ambition to become a dominant player in the global two-wheeler market.
For KTM, the infusion of capital comes at a critical juncture. The company has been grappling with financial challenges, including a liquidity crisis that led to court-supervised restructuring proceedings in November 2024. The fresh funding from Bajaj is expected to stabilize KTM’s financial position, enabling it to focus on product development and market expansion.
Statements from Company Leadership
In an official statement, Bajaj Auto expressed confidence in the acquisition’s potential to drive growth and innovation. The company emphasized that the move would allow it to “shift gears from being a dormant minority investor to a majority owner in the global KTM company,” thereby accelerating the thriving KTM business operated under the joint development program in India.
KTM’s CEO, Gottfried Neumeister, acknowledged the significance of the deal, stating that the partnership with Bajaj would “ensure the continuity of the KTM business by paying off the approved quota to the creditors and infusing funds into the company to revive its operations and working capital cycle.”
Future Outlook
The acquisition is subject to regulatory approvals in Austria, including clearances from the Austrian Takeover Commission, Foreign Investment Control, and Merger Control authorities. Upon completion, Bajaj Auto will gain a controlling stake in PBAG, granting it operational control over KTM’s global business.
This strategic move is expected to bolster Bajaj’s position in the high-performance motorcycle segment and reinforce its commitment to delivering innovative and quality products to customers worldwide.
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Note: This article is intended for publication on TechyRobber.com and provides a comprehensive overview of Bajaj Auto’s acquisition of a majority stake in KTM.
