Bajaj Auto Looking To Move KTM Stake To Its Parent Company

Mar 21 2019, 7:39 AMMar 21 2019, 7:39 AMMarch 21 2019, 7:39 AMMarch 21 2019, 7:39 AM

Bajaj Auto Ltd. is considering a proposal to tansfer its entire stake in KTM AG to the unit’s parent KTM Industries AG, and hold ownership into the parent instead, the company in an exchange filing. The deal is currently been evaluated by Bajaj Auto and Pierer Industrie, the majority shareholder of KTM Industries.

As per the proposal, Bajaj Auto will first transfer its 48 percent stake in KTM AG to KTM Industries AG, which will then issue shares to Bajaj Auto, in lieu of the current shareholding. The final decision on this reogranisation is expected to come by the end of June.

Bajaj Auto’s 48 percent stake in KTM AG is held through its wholly-owned subsidiary Bajaj Auto International Holdings BV. The majority stake is owned by KTM Industries AG.

If Pierer Industrie AG and Bajaj decide to execute the transaction, KTM Industries AG will examine the legal and economic requirements and conditions of a capital increase by contribution in kind from the existing authorized capital.

KTM Industries AG

Bajaj Auto first bought stake in Austria-based KTM back in 2007. Since then the company has invested a total of €198.1 million or Rs 1,219 crore, according to its annual report for the financial year 2017-18. The company valued this investment at close to Rs 2,529 crore as of FY18.

KTM Industries AG, is a listed entity which trades on the SIX Swiss Exchange. The share prices of KTM Industries closed trading on March 20 at €51.02 per share.

Considering Bajaj’s investment value and KTM Industries’ share price, Bajaj Auto might get close to 22 percent stake in KTM Industries, according to BloombergQuint’s calculations.

The manufacturing and distribution of the ‘KTM’ and ‘Husqvarna’ brands is done by KTM AG. Major markets include the North America, Western Europe, Australia, and Argentina. KTM Industries Group says it is the biggest European motorcycle producer and focuses on sport motorcycles and electro mobility.

KTM Industries generated most of its revenue from KTM AG. In the first half of 2018, KTM AG contributed nearly 87 percent of KTM Industries’ total revenue.