Volkswagen likely to sell Ducati at a valuation of $1.5 billion

Volkswagen’s Ducati sale may attract interest from India’s Hero MotoCorp, Chinese carmakers or the consortium that bought Aston Martin in 2007


Volkswagen Group firm Audi AG had bought the Italian sportsbike maker Ducati for $935 million in 2012. Photo: Bloomberg
Volkswagen Group firm Audi AG had bought the Italian sportsbike maker Ducati for $935 million in 2012. Photo: Bloomberg

Frankfurt: Volkswagen Group is considering a possible sale of Italian motorcycle maker Ducati as Europe’s largest carmaker seeks to streamline operations to fund a post Dieselgate strategic overhaul, two people familiar with the matter said.

Volkswagen (VW) is reigning in spending across all areas of group-wide operations including by cutting thousands of jobs at its core passenger-car brand to fund a multi-billion-euro shift to embrace electric cars and new mobility services.

VW has tasked investment banking boutique Evercore with evaluating possible options including a sale of the thoroughbred brand, which its luxury division Audi acquired for about €860 million ($935 million) in 2012, the people quoted above said.

While Wolfsburg-based Volkswagen has started reaching out to potential buyers to sound out their interest, no decision has been taken on whether the firm will be divested, they added.

VW referred to Audi for comment. Audi and Evercore declined to comment.

One of the sources said Ducati has annual earnings before interest, taxes, depreciation and amortisation (EBITDA) of roughly €100 million and could fetch a valuation of €1.5 billion, or 15 times its core earnings, a multiple similar to that of Italian supercar maker Ferrari SpA.

A banker close to the industry said potential buyers were likely to offer Volkswagen an earnings multiple of more than 10.

The motorbike group may appeal to peers such as Chinese groups, India’s Hero MotoCorp or investors such as the consortium which bought British sports car maker Aston Martin in 2007, the people said.

Private equity firms could also raise their hand for the brand, whose motorcycles have won the Superbike racing competition 17 times, the people said. It remained unclear whether large competitors such as Harley Davidson, Kawasaki or Honda could be interested, they said.

Analyst questioned Audi’s purchase of Ducati when it was announced in April 2012, saying the move bore no economic or industrial logic and solely reflected former Volkswagen Chairman Ferdinand Piech’s passion for the Italian company’s expertise on design and light engines.

But Piech, the main advocate of the deal, has since bowed out as group chairman and agreed earlier this month to sell the bulk of his stake in the Porsche SE family holding that controls VW to his younger brother.

VW said last June it would review its portfolio of assets and brands, which rekindled views among analysts that “non-core” businesses such as Ducati or a diesel-engine business for machinery could be up for sale.

Chief Executive Matthias Mueller, asked by Reuters at the March 14 annual press conference whether this review has since yielded any conclusions, said the carmaker still had nothing to announce.

Ducati posted sales of €593 million euros in 2016, according to Audi’s annual report. Reuters

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