Deal of the Year? Bajaj Auto’s €50 Million Option Exercise Paves Way for KTM Takeover

Bajaj Auto Limited has announced a landmark series of transactions that could see the Indian automotive giant assume full control of the iconic Austrian motorcycle brand KTM, marking a new era for both companies and the global two-wheeler industry.

 

Key Highlights:

 

Path to Majority Control: Bajaj Auto International Holdings B.V. (BAIH), the overseas investment arm of Bajaj Auto, has entered into a call option agreement to acquire the entire stake of Pierer Industrie AG in Pierer Bajaj AG (PBAG), the holding company that controls KTM’s parent, Pierer Mobility AG. Exercising this option will result in the exit of the Pierer Group from PBAG and hand Bajaj full control, pending regulatory approvals.

 

Critical Deal Structure: The call option agreement is crucial for BAIH to assume control of KTM, as PBAG holds a controlling interest in Pierer Mobility AG, which owns KTM, Husqvarna, GASGAS, and other renowned brands. The agreement allows Bajaj to purchase the remaining 50.1% stake in PBAG from Pierer Industrie AG by May 2026.

 

Cash Consideration: Bajaj Auto will pay a cash consideration of €50.65 million for the exercise of all 50,000 options, as part of the transaction to acquire the controlling stake.

 

Strategic Funding and Restructuring: Bajaj has already committed a total of €800 million (approximately ₹7,765 crore) in funding to support KTM’s restructuring and debt reduction, including secured loans and convertible bonds. This financial lifeline has helped KTM avert bankruptcy and resume operations.

 

Governance Revamp: Upon completion and regulatory clearance, Bajaj will revamp the governance framework at PBAG and Pierer Mobility, reconstituting the boards and implementing a turnaround plan to unlock long-term value and global growth opportunities.

 

Industry Impact: This move will transform Bajaj Auto from a significant minority investor to the majority owner of Europe’s largest motorcycle manufacturer, expanding its international footprint and strengthening its position in the premium motorcycle segment.

 

With this bold acquisition strategy, Bajaj Auto is poised to reshape the global motorcycle landscape, leveraging KTM’s legacy and its own manufacturing prowess for the next phase of growth.

 

Sources: MotoGP, Times of India, Business Standard