If youтАЩre not living under a rock, you might be aware that KTM motorcycle brandтАЩs parent company, Pierer Mobility AG, has been facing grave financial challenges. IndiaтАЩs homegrown Bajaj Auto, who owns 37.5% of KTM brand, proposed a systematic restructuring of the brand with an EUR 800 million (around Rs 7,770 Cr) debt relief package.
Now, Bajaj Auto has won a regulatory clearance from Austrian Takeover Commission, which is the major step in acquiring controlling stakes in Pierer Mobility AG. With this ruling Bajaj Auto can assume control of the Austrian motorcycle brand without any takeover bids to other shareholders.
Bajaj KTM Acquisition Plan Approved
This is made possible by Restructuring Privilege under Austrian law, exempting Bajaj Auto from making a mandatory bid to other shareholders as per Austrian Takeover Act. Now, Bajaj will soon takeover 100% stake in the joint venture Pierer Bajaj AG, increasing its stake from 49.9%, where the other 50.1% was held by Pierer Industrie AG.
After receiving necessary approvals from AustriaтАЩs Merger Control, Foreign Investment authorities and other relevant jurisdictions, the recent takeover approval by Austrian Takeover Commission can be final step in Bajaj AutoтАЩs takeover of Pierer Bajaj AG, which directly controls KTM AG along with other brands like Husqvarna and GASGAS.
The existing structure has Bajaj Auto International Holdings BV (Bajaj AutoтАЩs wholly owned subsidiary in the Netherlands) holding a 49.9% stake in the joint venture, Pierer Bajaj AG (PBAG) in Austria. Remaining 50.1% stake is with Pierer Industrie AG (PIAG), owned by the industrialist, Stefan Pierer from Austria.
PBAG holds a 75% stake in Pierer Mobility AG (PMAG), which controls KTM AG along with Husqvarna and GASGAS brands. Now, the 50.1% stake in PBAG, which is held by PIAG with a total of 50,100 shares, will be taken over by Bajaj Auto International Holdings BV, giving Bajaj around 100% control of PBAG and consequently 75% control in PMAG (KTM, Husqvarna, GASGAS).
EUR 800 Million Debt Relief Package
Bajaj Auto and PIAG have been in business since 2007 and this joint venture resulted in the manufacture of single-cylinder motorcycles under KTM and Husqvarna brands in Pune plant and exporting them to over 60 countries. Now, Bajaj Auto is taking over 100% stakes in PBAG by acquiring the remaining 50.1% stakes from PIAG.
A debt relief package of EUR 800 Million (around Rs 7,770 Cr) has been announced by Bajaj to avoid KTM AGтАЩs insolvency and meet restructuring obligations. EUR 450 Million was offered as a secured term loan, EUR 150 Million through convertible bonds and a further EUR 200 Million support package.
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