A Takeover in the Making? – TechStory

An important step has been taken by Bajaj Auto, a major player in the Indian two-wheeler market, to improve ties with KTM. In order to strengthen its position in the premium motorcycle market, the business is strategically investing up to 150 million euros (Rs 1,360 crore) in its Dutch subsidiary, Bajaj Auto International Holdings BV (BAIH BV). This action has raised questions about whether Bajaj Auto may soon acquire the majority of shares in PIERER Mobility AG (PMAG), the parent company of KTM. But there hasn’t been any formal confirmation of a takeover.

Credits: Dalal Street Investment Journal

Bajaj Auto’s Investment and Its Purpose

The Euro 150 million investment, approved by Bajaj Auto, will be utilized by BAIH BV to support its funding needs for various investment opportunities. This financial infusion, planned in multiple tranches until March 31, 2026, could take various forms, including equity capital, preference capital, or convertible/non-convertible loans.

Moreover, Bajaj Auto has already received the Reserve Bank of India’s (RBI) approval to proceed with this overseas investment, underscoring the company’s commitment to global expansion.

Bajaj Auto’s Stake in KTM’s Parent Company

BAIH BV currently holds a 49.9% stake in Pierer Bajaj AG (PBAG), which in turn owns 74.94% of PMAG, the parent company of KTM AG. This investment is seen as a crucial effort to aid PMAG’s financial restructuring and stabilize KTM’s operations, as the Austrian motorcycle brand navigates a challenging period of financial distress.

As part of this strategy, PBAG has already received a Euro 50 million loan from BAIH BV to support its ongoing restructuring process and prevent a potential bankruptcy crisis.

KTM’s Financial Troubles and the Need for Restructuring

Due to recent financial issues, KTM, a well-known brand for high-performance motorcycles, was obliged to undergo a court-supervised reorganization process. It is anticipated that Bajaj Auto’s prompt financial infusion will offer much-needed respite and guarantee KTM’s stability in the international market. This investment fits in nicely with Bajaj’s long-term goal of increasing its impact in the high-end motorcycle market, especially considering its long-standing production alliance with KTM.

Bajaj Auto’s Financial Performance and Market Position

Despite its aggressive expansion strategies, Bajaj Auto continues to post strong financial results. In Q3 FY25, the company reported a 3.27% increase in standalone net profit to Rs 2,108.73 crore, while revenue from operations rose 5.72% to Rs 12,806.85 crore, compared to Q3 FY24.

However, despite these positive earnings, Bajaj Auto’s share price was trading 0.31% lower at Rs 8,427.85 on the BSE at 12:30 pm, reflecting mixed investor sentiment over its foreign investment strategy.

Bajaj-KTM Partnership: A Long-Standing Collaboration

KTM’s growth has been greatly aided by Bajaj Auto, particularly in the production of small-capacity motorcycles like the Adventure series, the 200 Duke, 250 Duke, and 390 Duke. These motorcycles, which are made in India, have helped KTM keep a firm foothold in global markets while taking advantage of Bajaj’s capacity for cost-effective manufacturing.

Bajaj is now a major player in the high-performance motorcycle market thanks to this most recent investment, which further solidifies its position as a crucial partner in KTM’s global expansion.

Credits: HT Auto

Will Bajaj Auto Take Over KTM?

While Bajaj Auto has not made any official statement regarding a potential majority stake in KTM, industry experts speculate that this could be a stepping stone toward a more significant role in PMAG. If Bajaj Auto increases its stake in PBAG beyond 50%, it could effectively gain majority control over KTM’s parent company, further solidifying its presence in the premium motorcycle industry.

However, for now, Bajaj’s immediate priority appears to be stabilizing PMAG and KTM’s financial health while expanding its global footprint.

Conclusion

The most recent investment by Bajaj Auto in KTM’s parent business comes at a critical juncture when stability requires financial restructuring. Bajaj Auto is still committed to fortifying its strategic partnership with KTM and growing its market share in the high-end motorcycle market, despite ongoing rumors of a possible takeover. One thing is certain, regardless of whether this leads to a full acquisition: Bajaj Auto is establishing itself as a major force in the motorcycle sector on a worldwide scale.

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}