Bajaj Auto to acquire majority stake in Austrian bike maker KTM
Bajaj Auto is in the process of acquiring a majority stake in the Austrian bike maker KTM. The acquisition is part of a deal involving a shareholder debt of Rs 7,769 crore (euro 800 million) offered by Bajaj Auto to KTM, providing the latter with liquidity to reduce its debt.
Currently, Bajaj Auto effectively holds 37.5% in Pierer Mobility AG, which is the holding company of KTM AG, the manufacturer of motorcycle brands KTM, Husqvarna, and Gasgas.
Bajaj Auto, through its wholly owned subsidiary, Bajaj Auto International Holdings, holds a 49.9% stake in its associate Pierer Bajaj AG in Austria. The remaining stake in Pierer Bajaj AG is held by Pierer Industrie AG, owned by entrepreneur Stefan Pierer.
Pierer Bajaj AG holds around a 75% stake in its listed subsidiary, Pierer Mobility AG. Pierer Mobility AG is the holding company of KTM.
"Bajaj Auto intends to acquire a sole controlling stake in Pierer Bajaj AG. The equity ownership realignment and change of control will, however, be brought into effect only after regulatory clearances," Bajaj Auto said in a statement.
Bajaj Auto already infused Rs 1,942 crore in KTM and is in the process of infusing the balance amount of Rs 5,827 crore (euro 600 million) in the company.
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Of the proposed Rs 5,827 crore infusion, Rs 4,369 crore (euro 450 million) will be in the form of a secured term loan, and Rs 1,457 crore (euro 150 million) will be in the form of convertible bonds issued by Pierer Bajaj AG and subscribed to by Bajaj Auto International Holdings.
The immediate next step is to secure binding restructuring orders from the court in Austria to mark the end of the self-administration process and settle the creditors' quota.
Alongside, applications are being made to the Austrian Takeover Commission, Foreign Investment Control, and Merger Control Authorities, as applicable, for their approval.
After receiving the approvals, Bajaj Auto will initiate a revamp of the governance framework, including reconstituting the board, commencing the turnaround plan, implementing measures that widen the remit of the existing joint development program, and exploring potential partnerships to build sustainable competitive advantage and long-term value creation.
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