With the Volkswagen Group’s Board of Directors meeting done, ahead of the company’s shareholder meeting which is also now complete, details of Audi’s acquisition of Ducati are starting to emerge.
Paying €860 million ($1.1 billion) for the Italian motorcycle company, perhaps the biggest shocker to come from Audi’s acquisition is not the price, but the unconfirmed reports that Audi AG has bought 100% of the Ducati’s stock, meaning Borgo Panigale will now come under complete German control.
This news means that Audi not only bought out the 70% ownership of Investindustrial, but also the 30% remainder that was held by private equity fund BS, the Hospitals of Ontario Pension Plan, and other minority shareholders.
Unsurprisingly, this also means that Audi has assumed all of Ducati’s financial liabilities, estimated to be in the €180 million to €200 million range. This adjusts Audi’s valuation of Ducati to somewhere just shy of $1 billion, likely in the $850 million to $900 million range, which is considerably less than the $1.3 billion valuation Investindustrial placed on Ducati earlier this year.
Converting into euros instead of dollars, the valuation of Ducati Motor Holding’s business comes out to be €650 million to €685 million, which is a tidy sum for a company that did only €480 million in revenue last year. Some gorilla math pegs this purchase price multiple at around 1.5x Ducati’s revenues, a tad higher than the .9x multiple typically seen in manufacturing, though inline with assessments of Ducati’s intangible brand value.
According to Investindustrial, Ducati posted earnings before interest and taxes of only €51 million, a stark contrast to the €5 million the company was earning when Investindustrial first took ownership of the Italian brand. This figure largely is due to the fact that Ducati had a break-out year, and sold over 42,000 motorcycles in 2011, which helps the Italian motorcycle manufacturer account for 11% of the over-600cc market.
With European anti-trust regulators not expected to stop the acquisition, this week marks the starting point for Audi’s ownership of Ducati. It will be interesting to see what the German brand can do with its new Italian motorcycle company, both strategically and financially.