BAJAJ Auto has increased its stake in KTM Power Sports AG from 14.5% to 18.8%. The company plans to finally hold 25% in KTM, which is Europe’s second largest sport motorcycle maker. Bajaj Auto MD Rajiv Bajaj has been inducted to KTM board.
ET had reported that Bajaj Auto would up its stake to 25% in KTM when the deal was announced earlier this month. Bajaj picked up the 14.5% stake in the euro 566 million (Rs 3,200 crore) KTM from the open market for around Rs 300-350 crore as part of a ‘wide-ranging co-operation’ arrangement. The Pune-based two-wheeler major picked up the stake through its 100% Dutch subsidiary.
The alliance with KTM covers joint development of street bikes for both Indian and overseas markets. It will jointly develop a high-performance, water-cooled engine platform for 125 and 250 cc bikes. The engine platform will spawn several models—KTM will do KTM models and Bajaj will make Bajaj motorcycles.
The two companies will focus on their core markets for this new range of street bikes—Bajaj on India and the South Asian and South East Asian markets and KTM on Europe. But in the second phase, that spread will increase. That’s when the alliance will look at South East Asian markets like Indonesia, Philippines, China, Vietnam etc. The partnership will not only enable Bajaj to take over the distribution of KTM products in India and South East Asia, it will also enable the Indian two wheeler major to access the European market through KTM.
The cooperation will also cover product development, technology, vendor sourcing and distribution.