KTM’s Stefan Pierer Gobbles Up 25% of MV Agusta

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Big news today regarding Pierer Mobility (the parent company to KTM, Husqvarna, and GasGas) and MV Agusta, as the Austrian company is set to take a 25.1% ownership stake in the Italian manufacturer.

The news comes just a couple weeks after it was announced that KTM North America would takeover distribution of MV Agusta’s motorcycles in the United States, and quells rumors that have been circling about KTM’s interest in the Varese brand.

Through a terse press release, the two companies have released few details on their strategic alliance, but it does seem that the ownership stake in MV Agusta comes with a lifeline of capital to keep Italian factory churning out exotic sport bikes.

The press release also explains that Pierer Mobility will takeover the supply chain and purchasing for MV Agusta, and that KTM et al will handle distribution for MV Agusta in certain unnamed markets – like what has already been announced in the USA.

Source: MV Agusta

A&R Pro Analysis

How the two brands will coexist isn’t as clear though. So far, Pierer Mobility’s acquisition strategy of other marques has meant turning those brands into KTM-lite products – Husqvarna is designed to be the up-market version of KTM, while GasGas seems more budget-focused.

In reality, the distinctions between KTM, Husqvarna, and GasGas are slight, and from a consumer perspective, it seems that Pierer is just offering three color choices of the same product.

Having only a 25% stake in MV Agusta though means that the direction and business choices for the Italian brand still reside in Varese, with MV Agusta CEO Timur Sardarov.

This means that MV Agusta should still have a certain amount of autonomy from the other KTM brands, with KTM and MV Agusta sharing the most overlap, as both are pitching sport-focused products.

It is an open secret that MV Agusta’s operations overrun its income levels, and it is likely that the Italian company finds itself in the same position it has found itself in many times before – going broke. Global supply chain issues certainly haven’t helped the matter.

Having the buying power of KTM et al is certainly a boon for MV Agusta, and having access to the Pierer family’s distribution channels (read: dealerships) is another win for the Italians.

Despite their efforts on the latter point, MV Agusta has made few inroads to key markets in growing its dealership and overall presence – one of its biggest growth-limiters.

From that perspective, an exchange of 25% of the company’s equity for access to these two key business pieces could be a smart move from Sardarov and his team, as MV Agusta should surely see a return that is greater than this sum for these efforts.

Could we see Pierer taking a bigger bite out of MV Agusta in the future? That remains to be seen.

If MV Agusta’s trajectory changes, then certainly the Pierer Mobility group might want a bigger piece of the pie (cash flow is cash flow, after all). Though the counterpoint is that Sardarov might be less interested in offering some more slices of his company if things turn around substantially and he is no longer personally funding MV’s coffers.

Having KTM and MV Agusta completely under one roof is harder to see though.

For starters, it doesn’t fit the current strategy and thinking that we have seen within KTM’s ranks – one wouldn’t accuse Pierer Mobility of having  the most creative and finely tuned corporate development strategy. Pierer Mobility seems content on sharing models between brands, with few distinctions between them besides bodywork color. 

KTM in particular is missing a proper and robust sport bike lineup, however. While the Duke lineup does compete against the Brutale, though at different ends of the price spectrum, KTM has nothing to offer against the F3 and F4 motorcycles that have defined MV Agusta in modern times.

From that perspective, we can see how MV Agusta could compliment and expand the reaches of Pierer Mobility’s grasp on the motorcycle industry, but it would depend too on some shuffling within MV Agusta’s product lineup as well to make the rough edges of the puzzle fit together.

For now, the deal seems to be one of necessity. MV Agusta’s days are numbered in this new economy where large corporations over-power their smaller competitors in the fight for access to scarce resources. Failing at growing their distribution, the reach of MV Agusta has also been limited, which in turn stunts its growth. Some call this a death spiral.

That puts Varese between a rock and a hard place, where today’s lever from Pierer might be the only thing that moves the gap and gets them out of that impossible situation. As I am fond of saying, however, time will tell.