Volkswagen Likely To Sell Ducati

German marque Volkswagen is purportedly contemplating selling its motorcycle brand Ducati, says a report from Reuters. The motorcycle brand was acquired by Audi, Volkswagen’s daughter company, for about $935 million in 2012. The motive behind selling the bikemaker is an attempt to compensate for the huge losses that VW group suffered thanks to the Dieselgate scandal. 

Investment banking advisory firm, Evercore has been tasked by Volkswagen to assess the situation and look out for alternatives that include the probable sale of the motorcycle maker. According to Reuters’ sources, the company has already reached out to potential buyers to gauge their reception. However, both Evercore and Volkswagen have not confirmed the decision of selling Ducati yet. Volkswagen is likely to reach out to Hero Motocorp, a few companies from China and investment firms from Britain and UAE. The Volkswagen Group has remained tight-lipped about the proceedings. It is also not known whether bigger companies like Harley-Davidson, Polaris, Suzuki or Kawasaki are interested in the offer.

Before Audi purchased Ducati, Mahindra was reported to be one of the potential buyers, but the brand denied any intentions of buying the motorcycle brand. It is also unclear whether the brand plans to purchase Ducati now that the opportunity has presented itself again.

According to sources from Reuters, the annual earnings of Ducati before interest, tax, depreciation and amortization (EBITDA) is approximately $ 109 million and the valuation is pegged at over $ 1.63 billion or 15 times its core earnings, a multiple similar to that of Ferrari. According to a banker close to the industry, potential buyers were willing to offer multiples more than 10.

With multiple racing championship wins, Ducati is considered as a trophy brand which could attract investors looking for brand image more than technology. The sources also say that if Volkswagen fails to gain traction, then the brand is likely to consider a stock market floatation for Ducati.

Source: Reuters

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