MV Agusta Looking to Part Ways with Mercedes-AMG

04/28/2016 @ 2:01 pm, by Jensen Beeler22 COMMENTS

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The story of MV Agusta continues with even more interesting developments, as the Italian motorcycle manufacturer seems intent on buying back its shares from Mercedes-AMG, and recapitalizing with new investors.

Talking this week to Italy’s Il Giorno, MV Agusta CEO Giovanni Castiglioni said that he is “negotiating a buy-back of shares,” though that might be a task easier said than done for the Italian CEO

This is because MV Agusta’s current financial predicament is due primarily from the company’s massive debt accumulation, which now totals over €40 million.

To complicate matters further, some of that debt was secured by the involvement of AMG, and its investment contract stipulates that if AMG doesn’t own 20% or more of MV Agusta then the loaned sum is due immediately.

Thus, in order for Giovanni Castiglioni to fullfil his promise to buy back AMG’s shares in MV Agusta, he will need to find investors who are willing to cover the €15 million loan amount, and then invest the necessary capital to keep MV Agusta afloat.

Rumors from Italy and Germany suggest that Mercedes-AMG would prefer to buyout Castiglioni’s position in MV Agusta, owning it outright in the same way that Audi owns Ducati, but that Giovanni Castiglioni has deemed that a non-option.

The power struggle aside, MV Agusta has seen its revised business plan agreed to in Italian legal proceedings, which means that MV Agusta will massively reduce its business operations in order to return to profitable growth.

Under the new plan, MV Agusta will reduce its unit volume output from 9,000 units a year to a number between 6,000 and 7,000 motorcycles. It will also dramatically cut its R&D spending roughly in half, from €15 million to €7 million.

The racing budget from MV Agusta will also be cut, €4 million to €600,000, though that difference in spending will reportedly be covered by a third party, likely a team sponsor.

As you expect, all these reductions in production and racing budget means that MV Agusta will have to reduce its staffing size, to the tune of roughly 200 jobs. That, in itself, is an undertaking in Italy, with the way their labor laws work.

Time will tell as to whether Castiglioni can find a suitable business partner. The concern right now for brand enthusiasts is that the young CEO will be able to find not only an investing partner that is willing to take on MV Agusta’s financial needs, but also one that fits in with the brand’s ideals and long-term goals.

To that end, Castiglioni told Il Giorno that “we are interested in the quality of sales, immediately cash out the money to have liquidity. We want to go back to being the Ferrari of motorcycles.”

Source: Il Giorno

  • MrDefo

    This sounds like a non-starter to me. Big props to Giovanni Castiglioni for trying to stay on top of his company, but it’s going to take a special kind of madman to invest into MV Augusta like he wants.

  • Andrey

    “Big props to ….”???
    If there ever was a case of mismanagement of a motorcycle company this is it.
    Champagne plans on a beer budget.
    AMG would do well to either leave it alone or take full control.

  • Jorge

    The real hit of MV Agusta was the F4 design language introduced by Massimo Tamburini who passed away in 2014. Short of that the Castiglioni family haven’t done much right. If he respects the company his father restarted he would move on and allow the MV Agusta brand to continue under better stewardship.
    Most certainly he won’t be able to raise the money by finding new investors, not in this current market, and AMG will eventually take over.

  • imprezive

    Best to just sell controlling interest to AMG instead of burning it down trying to do his own thing. I’ve seen nothing from MV that tells me they have kind of secret recipe for motorcycle success as an independent company. They are like the Italian Buell more than motorcycle Ferrari.

  • MrDefo

    I mean respect given to the guy fighting for what he has and what he wants to hang onto. It doesn’t mean that I think he’s going to pull it off.

  • ryu600RR

    that’s a hard pill to swallow but probably the best medicine. frankly it doesn’t even make sense to pass up AMG, it’s all sentiments in the way if you ask me

  • Jake F.

    “We want to go back to being the Ferrari of motorcycles.” Is Fiat interested in a motorcycle company?

  • CogitoErgoZoom

    Oh PLEASE let this be true and happen, return MVA back into Italian hands, i nominate Piaggio Group to buy it.

  • CogitoErgoZoom

    Lapo the grandson of the FIAT-founder claimed yes, and was upset he never got the chance to buy Ducati, well Lapo here is your chance to make amends

  • Andrey

    Cogito, your name implies you may know of Moto International in Seattle. The foremost Guzzi dealer in North America.
    Piaggio???? Seriously???
    They have left Guzzi languish for years …. more incompetent Italian management!
    Ducati have an owner that is passionate, motivated and prepared to invest in the brand. Guzzi is lost because of Piaggio. Hopefully AMG would prove a better owner than another Italian company. The Italians dream big. The Germans just get it done.

  • paulus

    So Castiglioni did not coerce additional hand out funds out of AMG.. now he wants his ball and to go home. Good luck with finding yet another company willing to throw money into the black hole that is MV. Anybody thinking about it should just look at the history of burnt investors….

  • Travis Zilch

    That Italian pride is getting in the way doing what makes the most sense. I’d like to see Mercedes-AMG take it over and continue to develop the bikes and the dealer network.

    Castiglioni is going to let the company flounder for the next decade and lose the inroads it had been making in the American market instead.

  • Superlight

    This is no different than what Ducati went through back in the early ’80s and the fix may be the same – a private equity firm that knows how to run a business takes over the company. Giovanni will have to decide between loss of control and the survival of the enterprise.

  • Superlight

    I disagree. As good as the F4 design was, the current F3 is even better.

  • Superlight

    Obviously you’ve not ridden one the 3-cylinder MVs. Their “secret recipe” is the best aesthetics available on the market, excellent handling and an exciting powertrain. They’re not perfect (no bikes are), but they’re pretty darn good. Yes, I own one.

  • Jorge

    It’s the internet so I’ll lend you a hand.

    A design language or design vocabulary is an overarching scheme or style that guides the design of a complement of products or architectural settings.

    The F3 is not a departure from the F4 but an evolution of that existing design language.

  • Superlight

    I agree, the F3 is an evolution of the 1998 F4 design language by Tamburini; however, in many areas Adrian Morton has taken the original design theme and improved upon it with the F3, just as one might expect.

  • Christopher Ring

    MV seemed to be finally getting its bikes in order but you’d have to be mad to invest in Castiglioni run enterprise. He’s not a bad bike maker but he’s a terrible businessman. MV’s financing problems are primarily due to the fact that nobody trusts Catiglioni to pay his bills on time. If they can stabilize and expand their dealer network they’d be more viable in the longer term. AMG would be a great asset in helping MV fix their production process to bring the general build quality up and reducing costs, similar to what AUDI has done for Ducati over the past decade.

  • Wayne Thomas

    And how have those aesthetics made the company financially secure? You obviously don’t grasp that pretty does not mean economically secure.

  • Superlight

    I didn’t suggest that good aesthetics = financial security, but every product needs unique attributes, things they do well that others do not. Good aesthetics = product differentiation.

  • Superlight

    It’s hard to disagree with this logic.

  • ecoterror

    Having the coolest, best looking bikes on the market is only one side of the coin. Sooner or later he will realize, he’s the weakest link. I hope sooner.