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Takeover talk for Harley-Davidson

Harley-Davidson takeover lovers

Alarm bells are ringing today among Harley-Davidson fans of a return to the dark days of AMF ownership as rumours circulate of a takeover of the American motorcycle giant by a private equity firm.

Harley shares leapt almost 20% on Friday (July 1 2016) as traders reacted to unsubstantiated talk of a possible takeover by private equity company Kohlberg Kravis Roberts & Co (KKR & Co).

There was similar unsubstantiated speculation of a takeover in December 2015, but the market reaction this time seems to suggest it may be more likely.

We contacted HD HQ in Australia for comment but obviously they can’t even speculate or supply background information. KKR in New York and HD in Milwaukee have also refused comment.

So what does it mean for Harley owners, fans and potential customers?

It’s difficult to say at this stage, but it is also difficult to have a lot of optimism.

For many, it will signal a return to the ‘70s when American Machine and Foundry (AMF) bought the company, cut production costs, slashed the workforce and produced lower-quality bikes.

In 1981, Willie G Davidson led the buyback of the company which has since flourished.

Now, it faces increased competition from fellow American motorcycle companies Indian and Victory under Polaris ownership and discounted Japanese imports.

Harley reported a 1.4% increase in worldwide sales in the first quarter of 2016, led by a 4.5% increase in international sales while domestic performance was slightly down. There is not expected to be much difference when HD releases its second-quarter results on July 19.Harley-Davidson Sportster Roadster takeover

One of the problems for Harley has been its ageing male core customer base. They have responded in recent years with a new-model boom and a marketing direction that targets younger riders, females and ethnic communities.

The concern for Harley aficionados will be that the new models will dry up under new ownership.

Private equity firms are notorious for buying companies where they believe they can either extract costs or combine with a similar company to reduce overheads, pump up the bottom line for shareholders, then sell in three-to-five years for a large return.

Extracting costs usually means less money for research and development, marketing and new models.

KKR is one of the original private equity buyout firms. They’re the big boys in this space and are famous for having acquired companies such as Eastman Kodak, RJR Nabisco and Toys “R” Us.

We spoke to a corporate guru who wished to remain anonymous. He says KKR is also notorious for stripping and selling off!

“No one ever hangs on in this space,” he says.

“They usually put in a fresh management team and run things more efficiently which is code for sacking people.

“Sometimes they buy a couple of companies in the same space and instead of having two production lines they put everything through the same line and run it 24 hours a day.”

Harley-Davidson engine factory in Pilgrim Rd, Milwaukee takeover
Harley-Davidson engine factory in Pilgrim Rd, Milwaukee

Interestingly, MV Agusta, who were momentarily owned by Harley may be back on the market … just sayin’!

It would be such a shame if Harley is acquired by a company intent n striping and re-selling as the American giant has developed some very appealing models in the past few years, notably the Rushmore Project update to the Touring range, the Softail Breakout and the Dark Custom range.

  1. If AMF had not taken over harley would have sunk without
    trace and willie and co would have had nothing to get back.
    Triumph ,victory ,indian, bmw have all successfully addressed the issues
    of introducing new models for the up and coming riders, while bringing
    the older styles up to scratch performance wise.
    Harley has increasingly turned offshore to the likes of china and india
    with a resultant loss in quality .ie chrome and powdercoatings
    that peel. Too bad polaris isn’t taking them over

  2. Quality is always an issue for a premium and aspirational brand. Whatever we think of the product, the Harley *brand* is premium.
    I have never owned a Harley, maybe I never will, but if I did buy one I would want to know that it was mostly made in the USA and not just assembled there.
    The brand has a curious relationship with the 1%’ers of the biking world. The brand does not want to be associated with the worst aspects of the 1%’ers yet still benefit from some reflected “bad boy” imagery. It is a fine line to tread and a it is a somewhat broader line for other makers of cruisers be they Indian, Victory or the metric cruisers.

  3. I think stories like this are often made up by people who speculate on the stock markets hoping to make a buck out of the fools who panic and start selling up or buying up.
    Just watch some day trader is going to loose it and go on a rampage.

  4. It seems that people forget that the only reason H-D survived post AMF was the 70% tariff President Ronny Ray-gun imposed on all imported motorcycles over 700cc, reducing over a five-year period. USA – kings of free trade (not).

  5. over the past 45 years harley has sucked the money out of my pockets, i gave it up gladly. My first new bike was a 1976 superglide, 3100 dollars. Fast forward, 2015 streetglide, 22,000. Every time you walk in it is a hundred bucks, Half of the stuff is made in china or japan. I am paying up for an american bike built and delivered by american union workers. So far the streetglide has been in the shop for: bad saddlebag latches, clutch master cylinder bleeding down, and a bad compemsator. The back tire wore out at 8,000 miles. ( flat spots the dealer claimed) on me of course. If I didn’t love the bikes so much I would switch brands. Being a former marine, it makes me feel like a traitor to ride something that is not american. The motor company seems to have deserted us old guys, we kept it going when even a new one was falling apart. you needed the girls in the van with the tools following you to go out of town on one. I was in a local dealership the other day, there was a beautiful shovel head on display, the salesman had no clue what the motor was!!!! After years of this shit i am really close to trying out the other american brand. Jeff G

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