Bajaj Auto to take control of KTM business; shares trade nearly 2% lower

Shares of Bajaj Auto traded 1.8% lower at ₹8,530 apiece on the NSE at 11:50 am after the company announced a controlling stake in KTM’s business.

Bajaj Auto, through its wholly owned subsidiary -- Bajaj Auto International Holdings BV (BAIHBV), is planning to take control of the KTM business that is headquartered in Austria. With this action and post requisite approvals coming through, Bajaj will shift gears from hitherto being a dormant minority investor to a majority owner in the global KTM company, whilst it continues to accelerate the thriving KTM business that is run out of India under the joint development program, where it develops, makes and sells in India as well as exports to 80 countries across the KTM network.

Simultaneously, BAIHBV has arranged a debt funding package of €800 million to enable the continuity of the KTM business by paying off the approved quota to the creditors in furtherance of KTM’s debt restructuring with the approval of the competent Court in Austria and infusing funds into the company to revive its operations and working capital cycle. Of this total €800 million debt package, €200 million has already been infused into the company so far, and the balance of €600 million is being done now.

This twin move of taking ownership (subject to approvals) and paring down debt by providing liquidity at a crucial stage, positions Bajaj Auto as a driving force in shaping the future of one of world’s most admired high performance motorcycle companies.

To address the KTM business’s acute liquidity challenges and enable a structured revival of the brand that has a strong heritage and acclaimed position worldwide, Bajaj Auto outlines a set of strategic interventions. The proposed equity acquisition by Bajaj of a controlling stake in PBAG and therefore, in PMAG/KTM (upon receipt of regulatory approvals), after exploring various other alternatives until recently, is a critical step in realigning governance to restore confidence among stakeholders, setting a path for the operational restructuring of the business and creating flexibility for potential partnerships.