Bajaj Auto eyes off KTM takeover

Indian giant Bajaj Auto will take over KTM after the company indicated its intention to exercise a call option agreement.

The call option was agreed to by Bajaj and Pierer Industrie and enables Bajaj to take control of Pierer’s shares in KTM. A call option is a financial contract that grants a buyer the right, but not the obligation, to purchase a specific asset. 

Currently, Bajaj Auto has a 49.9 per cent stake in Pierer Bajaj AG, the parent company of Pierer Mobility AG, which is in turn the parent of KTM AG. Pierer Industrie AG owns the other 51.1 per cent stake.

However, after exploring various “alternatives”, Pieter Industrie will enable Bajaj to take majority ownership of Pierer Bajaj AG subject to regulatory approvals, effectivley giving it majority ownership of KTM. The exact nature of the new shareholding structure is still unknown.

The news comes after Bajaj secured a EUR 800 million loan to cover KTM’s debt repayment, which was due on May 23. 

It is still unclear exactly what Bajaj plans to do as KTM’s majority owner but early indications suggest the brand will maintain a strong presence in its Austrian homeland. 

Also unclear is where this leaves Pierer Industrie and its leader, Stefan Pierer.

However, it is now clear that the embattled KTM brand has dodged a bullet and will survive for at least a little while longer. 

Bajaj Auto has been a mostly passive shareholder in KTM since 2007, however it has manufactured certain KTM models (most notably the 390 range) on Indian soil for a number of years.

The Indian-based multinational company is one of the biggest motorcycle manufacturers in the world.