Harley-Davidson Buys MV Agusta Group

Saved by the Hog.

Harley-Davidson Buys MV Agusta Group

In a surprise announcement—or maybe not so surprising if you read our earlier story about Harley-Davidson talking to Ducati about a possible merger—The Motor Company announced it is buying 100 percent of the MV Agusta Group, which includes Cagiva, for 70 million Euros ($109 million). MV CEO Claudio Castiglioni will be paid an additional contingency (amount and conditions undisclosed) in 2016 "if certain financial targets are met."

In a conference call to shareholders on Friday, July 11, H-D CFO Tom Bergmann made it clear that the purchase would not change the basic nature or character of either company or its products. MV's headquarters will remain in Varese, Italy, and although there will be new directors of finance and accounting, Castiglioni will remain as chairman and Massimo Tamburini will stay on as head of design. According to Bergmann, there are no immediate plans to expand production or introduce new models.

Bergmann also downplayed the financial impact that the purchase would have on H-D—the deal was made completely with Euro-denominated debt—as well as any impact the Italian products might have on its own line or domestic customers. Last year, MV shipped 5800 motorcycles, of which only 5 percent were sold through the 45 U.S. dealerships. But the European market is important to H-D and, as 70 percent of European customers are interested in performance machinery like that made by MV, the purchase should increase the American company's standing and credibility overseas. Although H-D-owned Buell makes sportbikes, there will probably not be a lot of culture overlap. Bergmann described Buell and MV as "complementary but different."

Instead, the acquisition will mostly benefit MV. Suppliers will be paid, debt eliminated, R&D; funded and production stepped up from its current bare-bones level. If you're a fan of American motorcycles but are waiting for a world-class multi-cylinder sportbike, you may be disappointed. But if you lust after MV's beautiful designs and incredible performance, an unlikely knight in chromed armor has just saved the day.