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Bajaj Auto to acquire majority stake in KTM with €600 mn fresh infusion
Bajaj Auto Ltd on Thursday announced that it will become the majority owner of Austrian motorcycle brand KTM, strengthening its position in the premium motorcycle segment.
The deal, subject to regulatory approvals, will be executed through its Netherlands-based wholly owned subsidiary, Bajaj Auto International Holdings BV (BAIHBV), which will provide fresh funding of €600 million to KTM AG, in addition to the €200 million already infused as shareholder debt to ensure continuity and support the revival of the Austrian brand's operations. KTM is known globally for its popular brands like KTM, Husqvarna and GASGAS.
It was in November 2024 that KTM AG and its subsidiaries, KTM Components GmbH and KTM F&E GmbH, entered into a restructuring process, owing to liquidity challenges that could not service the spiralling debt and working capital constraints that stifled routine business operations. Later, on 25 February 2025, the creditors accepted the restructuring plan submitted by KTM AG, which provided for creditors to receive a cash quota of 30 per cent of their claims in the form of a one-time payment by 23 May.
Simultaneously, Bajaj has arranged a debt funding package of €800 million to enable the continuity of the KTM business by paying off the approved quota to the creditors in furtherance of KTM's debt restructuring with the approval of the competent court in Austria and infusing funds into the company to revive its operations and working capital cycle. Of this total €800 million debt package, €200 million has already been infused into the company so far, and the balance €600 million is being done now.
Through this, the Indian major will be acquiring a majority stake in Pierer Bajaj AG (PBAG), which indirectly owns KTM through Pierer Mobility AG (PMAG). BAIHBV holds a 49.9 per cent stake in Pierer Bajaj AG (PBAG) in Austria. The remaining controlling stake in PBAG is held by Pierer Industrie AG, owned by entrepreneur Stefan Pierer. PBAG holds a 75 per cent stake in its listed subsidiary, PMAG. PMAG is the holding company of KTM AG. Bajaj effectively holds a 37.5 per cent stake in PMAG/KTM through the above chain, prior to this transaction.
'Bajaj Auto intends to acquire a sole controlling stake in PBAG. The equity ownership realignment and change of control will, however, be brought into effect only after regulatory clearances,' the company said in a statement. The transactions were reportedly approved by Bajaj Auto's Audit Committee and will require shareholder approval through postal ballot.
'This twin move of taking ownership (subject to approvals) and paring down debt by providing liquidity at a crucial stage positions Bajaj Auto as a driving force in shaping the future of one of the world's most admired high-performance motorcycle companies,' the statement said.
Simultaneously, a Pierer group company entered into loan and share pledge agreements with Dabepo Holding GmbH in December 2024 for an amount which, along with interest and costs, adds up to €80 million. Bajaj, through BAIHBV, has taken over the commitment under these agreements from Dabepo, to prevent the threatened foreclosure of this loan, which could impede the planned restructuring and ramp-up of the KTM business.
Key milestones
1. On November 28, 2024, KTM AG applies for the initiation of judicial restructuring proceedings of KTM AG and its two subsidiaries.
2. On February 25, 2025, the creditors accepted the restructuring plan submitted by KTM AG.
3. This plan provided for creditors to receive a cash quota of 30% of their claims in the form of a one-time payment to be deposited with the restructuring Administrator by May 23, 2025.
3. On May 22, Bajaj Auto announces plans to acquire majority stake in the company via €800 million revival and restructuring plan
4. The Court will confirm the restructuring plan by mid-June 2025, post which the quota payment will be released to the creditors and the restructuring proceedings of KTM AG and its subsidiaries will be concluded with legally binding orders.
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