Harley-Davidson To Acquire MV
Agusta Group, Expanding Presence In Europe
July 11, 2008 - Harley-Davidson,
Inc. today announced the signing of a definitive agreement
to purchase the Italian motorcycle maker MV Agusta Group (MVAG).
Under the agreement,
Harley-Davidson will acquire 100 percent of MV Agusta Group
shares for total consideration of approximately 70 million
euros ($109 million).
This includes the satisfaction
of existing bank debt for approximately 45 million euros
($70 million). In addition, the agreement provides for a
contingent payment to Claudio Castiglioni in 2016, if
certain financial targets are met.
MV Agusta Group is privately
held, with the Castiglioni family owning 95 percent of MVAG
shares.
The acquisition is expected to
close in several weeks, pending the satisfaction of
contingencies and receipt of regulatory approvals.
Harley-Davidson intends to fund the transaction primarily
through euro-denominated debt.
MV Agusta Group has two families
of motorcycles: a line of exclusive, premium,
high-performance sport motorcycles sold under the MV Agusta
brand; and a line of lightweight motorcycles sold under the
Cagiva brand.
MV Agusta's F4-R motorcycle,
powered by a 1078cc in-line four-cylinder liquid cooled
engine, is rated at 190 hp. The company sells its products
through about 500 dealers worldwide, the vast majority of
them in Europe. In 2007, MVAG shipped 5,819
motorcycles. During 2008 MVAG has significantly slowed
production due to financial difficulties.
"Motorcycles are the heart, soul
and passion of Harley-Davidson, Buell and MV Agusta," said
Harley-Davidson, Inc. Chief Executive Officer Jim Ziemer.
"Both have great products and close connections with
incredibly devoted customers. The MV Agusta and Cagiva
brands are well-known and highly regarded in Europe.
They are synonymous with beautiful, premium, Italian
performance motorcycles," Ziemer said.
Harley-Davidson, Inc. plans to
continue to operate MV Agusta Group from its headquarters
based in Varese, Italy. Following closing, the first
priority will be to appoint a leadership team to include a
new Managing Director and to resume the manufacture of
current models.
Current MV Agusta Group Chairman
Claudio Castiglioni will continue in a leadership role as
Chairman and will play a major role in future product
development. Design Chief Massimo Tamburini will
continue his leadership of MV Agusta Group's world leading
sport-bike design studio.
"We take enormous pride in MV
Agusta and Cagiva motorcycles," said Castiglioni. "Our
riders seek an uncompromising experience in premium
performance motorcycles. And with Harley-Davidson's
deep understanding of the emotional as well as the business
side of motorcycling, I have great confidence that our
motorcycles will excite customers for generations to come."
According to Ziemer, the
acquisition is intended primarily to expand Harley-Davidson,
Inc's presence and footprint in Europe, complementing the
Harley-Davidson and Buell motorcycle families. Retail
sales of Harley-Davidson motorcycles have grown at a
double-digit rate in Europe in each of the last three years,
as the Company has increased its strategic focus on global
markets.
"The acquisition of MV Agusta
Group will enhance Harley-Davidson, Inc's position as a
global leader in fulfilling customer dreams and providing
extraordinary customer experiences. We look forward to
a long relationship with the MV Agusta and Cagiva families
of customers and employees," said Ziemer.
Although Harley-Davidson and MV
Agusta Group have signed a definitive purchase agreement,
there is no assurance that all of the contingencies will be
satisfied or that the governmental approvals will be
obtained in a timely manner or at all. The proposed
acquisition may not occur if the conditions to completing
the transaction are not satisfied in a timely manner.
In addition, Harley-Davidson
intends to finance a portion of the consideration by
borrowing funds and its level of indebtedness may increase
as a result, which may cause Harley-Davidson to incur
additional interest expense and limit Harley-Davidson's
ability to obtain additional financing.
It could also increase
Harley-Davidson's exposure to general adverse economic and
industry conditions and adversely impact Harley-Davidson,
Inc.'s earnings per share. Furthermore,
Harley-Davidson may have challenges successfully integrating
or profitably operating the business of MV Agusta Group.
