polaris ktm to remain independent

Polaris Industries Inc. and KTM Power Sports AG said today that they will continue their strategic partnership at an operational and technical level, but that they no longer foresee Polaris acquiring a majority equity interest in KTM.

Just over a year ago the companies announced that Polaris had bought a 25% interest in KTM, an Austrian motorcycle maker. At that time they said KTM's largest shareholder, Cross Industries AG, had entered into an option agreement that would allow Cross to purchase Polaris' interest or that Polaris could buy Cross' majority interest in KTM. While those options cannot be acted upon until 2007, it is likely that Cross will have the initial option.

Now both companies say they will be run independently and that Polaris and KTM will work on specific cooperative projects. "We are very pleased with the results of the first phase of the strategic partnership and look forward to continuing the relationship," said Stefan Pierer, KTM's CEO. "Nevertheless, Rudolf Knunz (the other principal in Cross) and I have recently informed Polaris of our intention not to sell Cross' interest in KTM to Polaris. We wish to remain in control of KTM and for KTM to remain an independent company."

Polaris also said it was happy with how the relationship has worked so far. Earlier this year the two agreed to a long-term engine supply deal for ATVs and in March KTM became Polaris' distributor in Germany.