• Jul 11th 2008 at 1:58PM
  • 19
Click above for high-res gallery of the H-D Night Rod Special

Earlier rumors of an impending purchase by Harley-Davidson of Italian bike maker MV Agusta turned out to be spot-on, as the American Motor Company has officially announced the deal today. The total price for MV, which also owns Cagiva, is reported at about $109 million, with $70 million of that sum required to pay off MV's debt. Claudio Castiglioni, who's family had previously owned the company privately, will remain on board and will serve as Chairman. Castiglioni stands to pocket an undisclosed sum in 2016 if he is able to meet certain stipulated profit goals.

This new deal is an interesting one on a few levels. First, HD already owns a sportbike brand, though its Buell subsidiary plays on a very different level than MV Agusta. The influx of cash from Harley should do wonders for MV's current range of sports and naked bikes, and may allow a greater number of customers access to the storied Italian marque. Consider the fact that Buell was a very small player with a number of quality problems before the Motor Company stepped in and fixed the situation. Additionally, the MV Agusta and Cagiva brands carry quite a strong legacy of high quality machines and will lend instant credibility in Europe and America to Harley's sporting credentials. The full press release is posted after the break. Thanks to all who sent this in!

[Source: Harley-Davidson]

Press Release:

Milwaukee, Wis. (July 11, 2008) - Harley-Davidson, Inc. (NYSE: HOG) today announced the signing of a definitive agreement to purchase the Italian motorcycle maker MV Agusta Group (MVAG). Under the agreement, Harley-Davidson will acquire 100 percent of MV Agusta Group shares for total consideration of approximately 70 million euros ($109 million), which includes the satisfaction of existing bank debt for approximately 45 million euros ($70 million). In addition, the agreement provides for a contingent payment to Claudio Castiglioni in 2016, if certain financial targets are met. MV Agusta Group is privately held, with the Castiglioni family owning 95 percent of MVAG shares.

The acquisition is expected to close in several weeks, pending the satisfaction of contingencies and receipt of regulatory approvals. Harley-Davidson intends to fund the transaction primarily through euro-denominated debt.

MV Agusta Group has two families of motorcycles: a line of exclusive, premium, high-performance sport motorcycles sold under the MV Agusta brand; and a line of lightweight motorcycles sold under the Cagiva brand. MV Agusta's F4-R motorcycle, powered by a 1078cc in-line four-cylinder liquid cooled engine, is rated at 190 hp. The company sells its products through about 500 dealers worldwide, the vast majority of them in Europe. In 2007, MVAG shipped 5,819 motorcycles. During 2008 MVAG has significantly slowed production due to financial difficulties.

"Motorcycles are the heart, soul and passion of Harley-Davidson, Buell and MV Agusta," said Harley-Davidson, Inc. Chief Executive Officer Jim Ziemer. "Both have great products and close connections with incredibly devoted customers. The MV Agusta and Cagiva brands are well-known and highly regarded in Europe. They are synonymous with beautiful, premium, Italian performance motorcycles," Ziemer said.

Harley-Davidson, Inc. plans to continue to operate MV Agusta Group from its headquarters based in Varese, Italy. Following closing, the first priority will be to appoint a leadership team to include a new Managing Director and to resume the manufacture of current models.

Current MV Agusta Group Chairman Claudio Castiglioni will continue in a leadership role as Chairman and will play a major role in future product development. Design Chief Massimo Tamburini will continue his leadership of MV Agusta Group's world leading sport-bike design studio.

"We take enormous pride in MV Agusta and Cagiva motorcycles," said Castiglioni. "Our riders seek an uncompromising experience in premium performance motorcycles. And with Harley-Davidson's deep understanding of the emotional as well as the business side of motorcycling, I have great confidence that our motorcycles will excite customers for generations to come."

According to Ziemer, the acquisition is intended primarily to expand Harley-Davidson, Inc's presence and footprint in Europe, complementing the Harley-Davidson and Buell motorcycle families. Retail sales of Harley-Davidson motorcycles have grown at a double-digit rate in Europe in each of the last three years, as the Company has increased its strategic focus on global markets.

"The acquisition of MV Agusta Group will enhance Harley-Davidson, Inc's position as a global leader in fulfilling customer dreams and providing extraordinary customer experiences. We look forward to a long relationship with the MV Agusta and Cagiva families of customers and employees," said Ziemer.

Conference Call
Harley-Davidson, Inc. will hold a webcast conference call regarding the acquisition from 8:00 to 8:30 a.m. (central time) today, July 11, with Tom Bergmann, Executive Vice President and Chief Financial Officer, Harley-Davidson, Inc. To access the webcast, please log on and register at least ten minutes prior to the start time at www.harley-davidson.com, under the Investor Relations section. A replay of the webcast will be available at the same location approximately two hours after the call concludes.

Company Background
Harley-Davidson, Inc. is the parent company for the group of companies doing business as Harley-Davidson Motor Company (HDMC), Buell Motorcycle Company (Buell) and Harley-Davidson Financial Services (HDFS). Harley-Davidson Motor Company produces heavyweight motorcycles and offers a line of motorcycle parts, accessories, general merchandise and related services. HDMC manufactures five families of motorcycles: Touring, Dyna®,Softail ®,

Sportster ® and VRSC™. Buell produces premium sport performance motorcycles and offers a line of motorcycle parts, accessories, and apparel. HDFS provides wholesale and retail financing and insurance programs primarily to Harley-Davidson and Buell dealers and customers.

Forward-Looking Statements
Harley-Davidson, Inc. intends that certain matters discussed in this release are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as Harley "believes," "anticipates," "expects," "plans," or "estimates" or words of similar meaning. Similarly, statements that describe future plans, objectives, outlooks, targets, guidance or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this release. Certain risks and uncertainties are described below. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this release are only made as of the date of this release, and Harley-Davidson, Inc. disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Although Harley-Davidson and MV Agusta Group have signed a definitive purchase agreement, there is no assurance that all of the contingencies will be satisfied or that the governmental approvals will be obtained in a timely manner or at all. The proposed acquisition may not occur if the conditions to completing the transaction are not satisfied in a timely manner.

In addition, Harley-Davidson intends to finance a portion of the consideration by borrowing funds and its level of indebtedness may increase as a result, which may cause Harley-Davidson to incur additional interest expense and limit Harley-Davidson's ability to obtain additional financing. It could also increase Harley-Davidson's exposure to general adverse economic and industry conditions and adversely impact Harley-Davidson, Inc.'s earnings per share. Furthermore, Harley-Davidson may have challenges successfully integrating or profitably operating the business of MV Agusta Group.

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    • 1 Second Ago
      • 7 Years Ago
      Good news for H-D. I have heard rumors that they want to expand into mx bikes and Cagiva will give them that opportunity.
      • 7 Years Ago
      HD is stuck in a time warp.It needs new blood and technology-HD does not have the neccessary know-how or technical expertise of any other manufacturer.
      I had hoped that the rumour that Honda would purchase HD was true.
      It would be great to have a Japanese owner of HD and transform those lumps of steel into real motorbikes.Better still,they could dismantle the HD company and start making more enviromental friendly bikes.
        • 7 Years Ago
        Your comments simply show how out of touch you are with the type of person who purchases both the HD and the MV products. If you believe that HD does not have the expertise or resources to build a different type of bike you are simply ignorant. What they are exceptionally good at is knowing their market and adapting to it. I only hope that they don’t choose to re invent MV altogether, it is a wonderful small company with a rich tradition that would be a shame to alter and loose its heritage. And frankly part of what makes it so special is that you don’t see them at every light with some teenager on it doing burn outs. Maybe you’re simply envious of those fortunate enough to own one or both of these bikes?
      • 7 Years Ago
      I love both HD and MV Agusta machinery, but as a consumer, both brands get passed in my consideration due to high prices and less than great (but not terrible) reliability.

      This is like the Dennis Rodman & Carmen Electra marriage. It appears perfect in an odd kind of way. I just hope this marriage, unlike Rodman & Electra, actually last last!
      • 7 Years Ago
      Hopefully they build a nice looking sport bike and sell it for around 18k. It will already be exclusive enough because it is already hard to justify buying a 15k ducati over a gxr or a R1. Ducati is doing well enough though with the 1098 because its priced just right for those people who think they have discerning taste to pony up the 30% extra cash to get an object of desire without breaking the bank like the 999 use to do. I am pretty sure MV will use this strategy to go a bit more mainstream, because that's the only way they are going to make a profit besides selling ridiculously priced limited editions F4s.
      • 7 Years Ago
      Nice move harley
      • 7 Years Ago
      I can't get the theme from the Godfather out of my head.
      • 7 Years Ago
      I can just see MV Agusta's with HD's latest 1930's cast iron engine technology.
        • 7 Years Ago
        Um - been paying attention? The V-Rod uses a DOHC water-cooled V-twin, designed in part by Porsche. Even among the more "retro" models, the current Twin Cam is hardly the same as a Shovelhead, or even the last of the Evolution blocks.

        Besides, Harley's not dumb - they wouldn't have survived and succeeded for so long otherwise. Messing too much with Agusta would be sacrilegious, and H-D's not about to screw with a cash cow.

        By the way, wasn't Indian supposed to make another comeback sometime soon?
      • 7 Years Ago
      HD has proven with their own product and Buell that they are moe than capable of selling and marketing. This can only mean good things for MV.
      • 7 Years Ago
      For VW who wishes to get into the motorcycle game, but missed (first was Ducati decades back, and now MV Agusta)...strike two!
        • 7 Years Ago
        VeeDub is rumored to be more interested in KTM...
      • 7 Years Ago
      Harley is a great company, no matter your opinion of the product - they are a tremendous company. They make money, grow, and return value to the investor. Turned Buell into a money maker and hopefully they can do the same with this awsome Italian brand! Way to go HD!
        • 7 Years Ago
        This sucks. It will ruin the image of some great companies.
        • 7 Years Ago
        will it? MV was owned by Malaysian car maker Proton. Not the most glamorous brand in the world and it didn't hurt their image.

        I'm surprised Harley would spend money like this. Their future growth is somewhat uncertain. And I bet Harley dealers have enough trouble selling "exotic" Buells. I can't imagine an F4 in a Harley shop. But I guess we'll see.
      • 7 Years Ago
      Should be interesting to see if the Harley puchase does any damage to the equity of the MV Agusta brand. Some people will certainly depart for other products if the partnership does "give more buyers access" to Agustas- brand snobs hate that. However, if they remain exotic and hardcore, and the Harley cash just goes into better quality and improved management, this could be a very good move for both companies.
      • 7 Years Ago
      First of all, I don't think you're instantly going to see MV Agusta dealers on every street corner in North America. For that would be ludicrous, and stupid.

      Second, I think this actually will cause the Harley brand to become more upscale (by allowing them to retain their "cruiser" niche) and the Buell brand to expand its reach (by rebadging Cagiva dirt bikes, adding a scooter line, etc.)

      Actually, this is kind of a case of history repeating itself - Harley already owned the Italian moto brand Aermacchi from the 1950s into the 1970s. Basically, they've just stepped up to a higher class of Italian motorcycles this time.
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