Just a couple of weeks ago, word got out that Ducati is looking for a buyer, possibly considering Volkswagen and BMW as potential suitors. Then a week ago, up pops Hero MotoCorp in a relationship with Erik Buell Racing, showing they have intentions beyond the small displacement motorcycles they’re currently known for. Now, in what has to be one of the more surprising developments in all of this, word is out that Hero MotoCorp is talking to bankers about a possible acquisition of Ducati. Wow! I guess they really are trying to expand into another market.
“We’ve been seen as a utility-bike maker, fuel-efficient bikes, and somebody who’s at the lower level of the market, who’s more small-town and rural-market focused,” said Munjal. “So our ambition is to become one of the biggest global two- wheeler players and to do that, you cannot only be in one small segment”
This may be very preliminary and no one is going to be talking about it outside the boardrooms where the discussions are taking place, but what is becoming clear is many more buyers may be getting into this game than everyone initially thought.
Let’s see, a company manufacturing motorcycles in Italy, with its largest market in the USA and owned by a company in India. Would it be any different if they were owned by a company in Germany? Does any of this even matter any more? Hero MotoCorp certainly wouldn’t be the first name to pop up when you think of a Ducati sale, but it does make you wonder who else may be interested in the Italian manufacturer.
UPDATE: In an update to their previous article, Bloomberg reports Hero has cash reserves of about $1 billion, quite an accomplishment, considering their current range of motorcycles start at $763.
“Investors are scared about Hero’s plan of buying Ducati,” said Umesh Karne, an analyst with Brics Securities Ltd. in Mumbai. “Hero will have to take on the burden in terms of Ducati’s debt so initially there may be some pain.”
This is going to be an interesting process to follow as the big money starts to circle Ducati. Ducati enthusiasts probably need not worry about the company continuing with its product line, at least for the near term, since that is the value, along with the underlying technology, that’s being purchased. However, if a company like Hero is trying to branch out and establish itself as a player in a much larger market and they are successful in their acquisition, sooner or later, motorcycles with Ducati’s technology may begin to appear with the Hero nameplate. Hero in MotoGP? Like I said, this could get very interesting, especially as the other potential buyers begin to see new and unexpected suitors moving in.