Harley-Davidson To Go Private? – Rumors of KKR Leveraged Buyout Spur Wall Street

03/16/2010 @ 11:23 am, by Jensen Beeler10 COMMENTS

Harley Davidson To Go Private?   Rumors of KKR Leveraged Buyout Spur Wall Street Gordon Gekko Wall Street1

Harley-Davidson is all the rage this morning on Wall Street as rumors of the company getting bought out by private equity firm KKR abound. The rumors suggest that Harley-Davidson could be taken into private ownership if KKR’s rumored leveraged buyout (LBO) should materialize. KKR is giving its standard “We don’t comment on deal speculation” reply, while Harley-Davidson reps could not be reached, which makes this rumor hard to confirm. True or not, Wall Street is acting like its the real thing.

Investors on Wall Street seem to be taken the rumor seriously, as Harley-Davidson’s stock is up 6% after being one of the most heavily traded stocks on the New York Stock Exchange today. Adding more fuel to the fire was the increase in calls being made on HOG stock. Calls are basically a contract to purchase a stock made between two parties.

The contract gives a buyer the option to buy a certain amount of stock at certain price by a fixed date in the future, so when traders buy calls, they do so with the hope that the price will continue to rise. Since most of the activity today is in these call options (set to expire in March & April), it suggests that Wall Street sees an immediate gain in Harley stock in the next 30 days or so. Since it’s unlikely that Harley is about to release great financials and sales numbers, the culprit for the trading is surely a buyout rumor.

KKR’s LBO could see the private equity firm buying Harley-Davidson stock at a premium, in an attempt to swallow up the company in one gulp. This scenario would make sense with all the call option purchases, since KKR will have to pay considerably more than the market price to get all of Harley’s stock from its shareholders. These investors are basically betting on this situation coming to fruition, and judging from the activity in the market, the expectation of this occurring is high. Compare that to the fanciful rumor going around about Ducati and Piaggio merging, which still have pegged at not very likely.

Source: Reuters via HFL

Comment:

  1. Harley-Davidson To Go Private – Rumors of KKR Leveraged Buyout Spur Wall Street – http://bit.ly/ckmQJT #motorcycle

  2. RT @Asphalt_Rubber: Harley-Davidson To Go Private – Rumors of KKR Leveraged Buyout Spur Wall Street – http://bit.ly/ckmQJT #motorcycle

  3. Harley-Davidson To Go Private? – Rumors of KKR Leveraged Buyout Spur Wall Street – http://bit.ly/ckmQJT #motorcycle

  4. Not Interested says:

    Seems like KKR wants to get into the clothing business. They sure would not want HD for there aging line of bikes.

  5. Willie says:

    Must be a slow news month in the MOTO world.
    Henry Kravis on a Fatboy ?

  6. Slippery says:

    Its now wonder this country is in the shape it is in. The wall street idiots think HD is a good buy out company. Good God, it will take millions and millions to bring the junk they make up to date much less design a new bike for future younger buyers. The only suckers they have now for there out of date bikes are the 50’s and 60’s crowd who like to play dress up like a pirate and ride around town making noise with no exhaust. I’ll make a bet that they want the trade mark name so they can continue selling the aftermarket products to present Harley owners. They will shut down production or sell the production to China and keep the clothing line and such for themselves. Every Harley rider has to have a window decal, Harley t-shirt, do rag, ash tray, clock and Harley tools. – Morons………..

  7. Willie says:

    Jensen,

    Why are you still headlining a “story” from 3/16 ?
    Suggest you report on areas of more salient concern to your readers and avoid speculation about that which you obviously have little knowledge. HOG has always been a volatile stock and has cost many novice traders dearly. Also notice the stock has stalled under dwindling volume since the one day move.
    Playing “rumors” ( a euphemism for planted stories designed to manipulate price movement) nearly always suckers the uninitiated – your readers.

  8. @Reyzie says:

    We might not be so “uninitiated” as our friend Willie says. Most of us dumped Harley stock years ago, seeing the obvious writing on the wall, that Harley corporate somehow missed!? They’re now more upside down (percentage wise) than just about any company in the US!

    Personally, although I saw HD laughing all the way to the bank and would have typically partaken in a little profit taking, I chose NOT to invest in a company that I felt was so detrimental to motorcycling in the US! With HD leading the way, American motorcycle design is the laughing stock of the world! As an American, I personally consider that to absolutely shameful! But I digress…

    And although you’re “head lining” an article from 3/16 as seemingly “old news,” MSN Money Central picked up, today, on a similar story: “5 of the worst corporate boards.” Harley’s on pg 3. Imagine that? See http://bit.ly/Dead_Wood

  9. Knows Better says:

    Anyone who trades in Harley stock is as stupid as the Harley management. HD is a dying company that refuses to step into the 21st century. One look at there advertising and there product line would give any intelligent person a good excuse to ignore the company, its stock and its outdated products. Harley is firmly planted in marketing to the over 50 buyers who like the outlaw image and like to spend money on a “image” and or “lifestyle” and are not very concerned about value for there dollar. Mainly insecure people who like to be seen and heard on a loud and obnoxious motorcycle wrongly thinking that the Harley will buy them some type of respect.

  10. Not Interested in HD says:

    A fool and there money are easily parted.