- Bajaj offers KTM takeover
It has become common knowledge that KTM, a renowned motorcycle manufacturer, is currently in financial turmoil. The company has been bleeding money and it has been a major buzz in the automotive world. Now, Bajaj, who controls around 37.5% of KTM brand, is upping its stakes to take control of KTM brand with a debt funding package of EUR 800 million (Rs 7,771 Cr).
Bajaj Offers KTM Takeover
Before understanding the debt funding package Bajaj is offering to buy controlling stakes of KTM brand, we have to understand the existing structure. Bajaj Auto’s wholly owned subsidiary in the Netherlands, Bajaj Auto International Holdings BV (BAIHBV), holds a 49.9% stake in the joint venture, Pierer Bajaj AG (PBAG) in Austria.
The remaining 51.1% stake is controlled by Pierer Industrie, owned by Stefan Pierer. PBAG holds a 75% stake in Pierer Mobility AG (PMAG), which is the holding company of KTM AG, which also controls Husqvarna and GASGAS brands. In essence, Bajaj holds a 37.5% stake in KTM AG and is now offering to take controlling stakes.
To address KTM’s acute liquidity challenges, increasing debt, working capital constraints and other woes, Bajaj is proposing an equity acquisition plan for a structured revival of KTM brand and restoring confidence among shareholders. One that aims to rebuild the company and reaffirm its position in the world of premium and sporty motorcycles.
What next?
Bajaj aims to secure a sole controlling stake in PBAG, which will increase its stakes in PMAG, the holding company of KTM AG. On 25th February 2025, creditors accepted KTM AG’s restructuring plans applied on 18th November 2024. Following the Austrian Takeover Act favouring a distressed company, BAIHBV is offering a debt funding package to keep KTM afloat.
We’re talking about a package of EUR 800 million which roughly translates to Rs 7,771 Cr. Bajaj has already infused EUR 200 million (Rs 1,941 Cr) through four tranches of EUR 50 million (Rs 485 Cr) across FY24 and April-May 2025 as shareholder debt. EUR 150 million (Rs 1,456 Cr) from Bajaj is offered as creditor’s quota and restart cost.
This leaves EUR 450 million (Rs 4,370 Cr) of the EUR 800 million (Rs 7,771 Cr) that BAIHBV will loan to KTM AG via PMAG through PBAG as a secured term loan. With this debt funding package, Bajaj aims to reconstitute the brand for a journey of turnaround for competitive growth and financial viability along with long-term value creation.
Source: Bike - rushlane.com
