Bajaj Auto targets KTM and forgets Triumph

As reported earlier Bajaj was in talks with the Top European Motorcycle manufacturer Triumph for  partnership. Now all those are history and Bajaj now plans to focus more on the Austrian Bike Manufacturer KTM.

Bajaj Auto along with KTM will be launching some new products in the Indian market in the year 2009. Bajaj already has 25 % stake in KTM.

According to Economic Times Report:

Bajaj Auto, which was negotiating with top European motorcycle brand Triumph for an alliance/acquisition, has now decided to put those plans on the backburner and instead focus attention on its KTM brand. The Pune-based two-wheeler major will increase its holding in KTM, Europe’s second largest sport motorcycle maker, from the current 25% to around 30% by early next year.

Accordingly, it plans to increase its representation on the KTM board as well. When contacted, Bajaj Auto MD Rajiv Bajaj said: “We are focussing our top-end efforts on the KTM brand. By next year some of those products will be out in the market and we will work towards riding that brand in the lifestyle segment.

We are not pursuing any further negotiations with overseas brands right now.” Although no confirmations were available, market sources say the 5% increase in stake would cost around Rs 60-80 crore. Bajaj Auto started talking to Ducati and Triumph mid 2007. By the end of the year, company chairman Rahul Bajaj was quoted saying that BAL has walked away from Ducati because it was too expensive.

However, as late as January 2008, Triumph boss John Bloor came to India and visited BAL’s Chakan plant. Talks continued through summer but seems to have stalled since then. Bajaj Auto bought 14.5% of KTM from the open market in October 2007 for around Rs 300-350 crore. It subsequently raised its stake to around 20.9% and then to 25%. Mr Rajiv Bajaj is already on the board of the company.

In the last 10 months, a lot of the product development and R&D work for KTM has shifted to India and Bajaj will roll out its KTM range through its Probiking retail network shortly. Bajaj Auto-the market leader in the performance segment in India, thanks to the Pulsar twins and Avenger-had been looking for an alliance or acquisition to possess enough engineering and product development expertise to crank out cruisers and higher displacement bikes in the 200 cc plus range.

The company has been getting increasingly aggressive with its bike retail channel Probiking and Mr Bajaj has been on record that the company will crank out more products to stock its Probiking shelves.

The promoters of KTM currently own 50.1% of the company. The company is listed on the Vienna stock exchange and Bajaj’s current stake comes from the free float shares making it the second largest shareholder. At the time when the first tranche of 14.5% stake acquisition, KTM CEO Mr Stefan Pierer told ET, “If there’s something free on the market they (Bajaj) could end up increasing their participation. We see this as a long-term partnership and we would be very positive about it.”

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