polaris links with austrias ktm
Amsnow
Polaris Industries Inc. said Tuesday it will buy a 24% interest in KTM Power Sports AG, an Austrian motorcycle maker, for about $80 million.
Polaris said it also has the option to become the majority shareholder in KTM in 2007. Likewise, KTM has the option to buy back Polaris' interest in the company at that point.
The two firms initially will work together on new product development, engine technology sharing, distribution, manufacturing and purchasing efficiencies.
Tom Tiller, Polaris' CEO, said Polaris will benefit from "KTM's substantial experience in motorcycles," its leading technology, solid manufacturing presence and dealer network in Europe.
In a conference call he indicated the deal will primarily benefit the ATV portion of Polaris' business by giving it more access to the European market and possible manufacturing facilities for ATVs in Europe. KTM likewise is expected to benefit from Polaris' dealer network of 1,700 in North America. Currently KTM has about 400 N.A. dealers.
Tiller said in the call that there will be no immediate impact from the deal on Polaris snowmobile segment. However, he noted that KTM, know for its performance off-road cycles, has a "great engineering staff" that can "only be helpful" to all of Polaris' divisions.
He also praised KTM, which like Polaris has been in business about 50 years, for its class-leading power-to-weight ratios on its products. And Tiller promised that neither Polaris nor KTM would sell rebadged versions of the other's products. "We're not just going to repaint them," he said.
KTM is the No. 2 motorcycle maker in Europe, behind only BMW. The firm had 2004 sales of nearly $500 million when it made 77,000 units. Its cycles won 10 World Championship titles that year and have won 106 World Championship titles overall.
In addition to off-road cycles, KTM has recently moved into the on-road cycle market and also makes frames, exhaust systems, shocks and spoke wheels. It makes engines ranging in size from 50cc to 950cc.
Polaris 2004 sales were $1.8 billion, including snowmobiles, ATVs and motorcycles.
Tiller said that long-term he could see the deal with KTM making a joint company the largest non-Japanese powersports equipment maker in the world and would give it dominance in the North American and European markets.