Reuters has cited unnamed sources as indicating that German Audi/VW owner VAG is considering the possible sale of Ducati as Europe’s largest carmaker streamlines operations to help fund a strategic overhaul following its emissions scandal.
Citing “two people familiar with the matter”, Volkswagen (VW) is said to be cutting spending across the group, including cutting thousands of jobs at its core passenger-car brand, to help pay for a multibillion-euro shift to embrace electric cars and new mobility services.
VW has tasked New York headquartered investment banking boutique Evercore (EVR.N) with “evaluating possible options including a sale of the Ducati brand, which its Audi division (NSUG.DE) acquired for about 860 million euros ($935 million) in 2012”, the sources told Reuters.
“While Wolfsburg-based VW has started reaching out to potential buyers to sound out their interest, no decision has been taken on whether the brand will be sold”, they added.
VW referred to Audi for comment; Audi and Evercore declined to do so.
According to Reuters, one of the sources said Ducati made annual earnings before interest, taxes, depreciation and amortisation (EBITDA) of roughly 100 million euros and could fetch a valuation of up to 1.5 billion euros, or 15 times its core earnings - a multiple similar to that of Italian supercar maker Ferrari (FCHA.MI).
Reuters say that a banker close to the industry said potential buyers were likely to offer VW an earnings multiple of more than 10, and that Ducati may appeal to motorcycle businesses or investors in China, such as those who bought tyre maker Pirelli two years ago. India’s Hero (HROM.NS) is quoted by Reuters as another potentially interested party; though given Hero’s “stubbed toe” over its involvement with Erik Buell Racing and previously announced but indefinitely delayed plans for Europe, it is likely that there are other Indian corporations, with and without current powersports industry involvements, that would be more likely candidates – candidates such as 51 percent Peugeot Scooter owner Mahindra and Mahindra.
It is also rumoured that former Ducati owner and current Aston Martin Lagonda co-owner Investindustrial and former Ducati CEO Gabriel Del Torchio could also be “in-play”.
“It is an asset for trophy buyers with bigger interest in the brand than in the technology”, one of Reuters’ sources is quoted as saying. It remains unclear whether large competitors such as Polaris, Harley or Honda might be interested, they added.
Reuters also reports that if VW does not attract sufficient interest, it may also consider a stock market flotation for Ducati.
Volkswagen Group profits have soared in the first quarter of 2017 as those cost-cutting measures kick in. Group profit before tax rose 44.3% to 4.6bn euros, one of the carmaker’s highest quarterly results to date.
Meanwhile, the group’s troubled flagship brand also saw profits surge. Volkswagen brand operating profits rose to 869m euros from 73m euros the year before. VW last year overtook Toyota as the world’s biggest selling carmaker. Quarterly profit at Audi slipped to 1.2bn euros from 1.3bn euros a year earlier.
