Polaris in the MV Agusta Acquisition Mix?

05/27/2016 @ 5:57 pm, by Jensen Beeler20 COMMENTS

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If you believe the rumors coming out of Italy, Polaris is poised to save acquire ailing motorcycle manufacturer MV Agusta.

We have documented MV Agusta’s precarious financial troubles already in great detail, and how MV Agusta CEO Giovanni Castiglioni is between a rock and a hard place with his main investor, Mercedes-AMG.

According to the Italian media, and those who repeat their words like parrots, Polaris represents an escape from MV Agusta’s difficult position with the German automobile-maker, though the reality is that nothing could be farther from the truth.

The issue with AMG is that the German car brand was interested in acquiring the rest of MV Agusta, moving from its 25% position in the company to at least a 51% ownership figure – though smart money would see AMG becoming the sole-owner of MV Agusta, pushing Castiglioni fully out of the Italian marque.

And there’s the rub – as it has been reported that Giovanni Castiglioni wasn’t interested in losing MV Agusta to AMG – the company his father resurrected in the 1990s, young Giovanni’s virtual home during his formative years, and the provider of a lavish lifestyle for the 30-something CEO.

The details of MV Agusta’s finances makes it difficult for another investor to come on board with the Italian motorcycle company, which creates a stalemate situation for the brand.

The current plan is for MV Agusta to reduce costs, reduce output, and wait for current models to provide the cash flow to pay back the company’s creditors. Whether or not that means an exit for AMG (and the aftermath that could ensue from that), only time can tell.

So what about these rumors of our white knight, Polaris? That’s where the Italian media, and perhaps those inside MV Agusta, seem to be grasping at straws.

Polaris’ name seems to get dropped anytime there is a failing business in the motorcycle industry (read: EBR), probably because of three reasons: 1) Polaris has savvy business chops, 2) Polaris is financially on strong ground, and 3) Polaris is one of the few acquisition-focused companies in the industry.

The problem with the Polaris theory though is that it does nothing to change the circumstances involved with MV Agusta, especially the ones that are causing the Italian marque the most pain.

This is because an acquisition by Polaris would still invoked deal-breaking realities. It would wrestle the brand out of Castiglioni control, and it would trigger the immediate pay back for the €15 million loan from Banca Popolare di Milano.

This makes the speculation interesting, but difficult to swallow in the real world. As they say though, where there is smoke, there is fire.

Our colleagues to the north at Canada Moto Guide have shed some light on what may be really going on here, as one of their sources says that the Minnesota company is looking to enlist the services of MV Agusta in building them a new motor.

Details are thin on that collaboration, but MV Agusta does have a small army of engineers capable of the task, and if there is one thing with the company’s bikes the past few years that you can’t complain about it, it is the powerful and compact motors that Varese designs and builds.

Polaris has acknowledged talking to MV Agusta about collaborations together, though the American company has flatout denied the intent to purchase the Italian brand.

This means we will have to endure more speculation and intrigue from MV Agusta, in what surely will be a grind back to profitability. As the world turns.

Source: Canada Moto Guide

  • midwestern mountains
  • sutty

    Very interesting. Cathcart perfect for this interview, knows his place.

  • Paul McM

    Hmmm… the maker of some of the most beautiful bikes in the world is acquired by the maker of some of the ugliest bikes in the world. Is this a marriage made in heaven… or in hell? To be honest, if this just means we are going to more bad-handling, clunky, ugly-as-sin Victorys rebranded as MVs, then I’ll cry now…

  • imprezive

    I just don’t see why they would possibly want to do this. It’s a messy financial situation with stubborn management. What would Polaris really gain? Some racing experience and a decent sportbike platform. That’s a lot of money to spend for that.

  • Nicko55

    Considering Polaris can’t build a successful brand themselves (Victory anyone?), it vaguely makes sense they’d be looking to an established performance company like MV… but they aren’t, because it makes no sense for them to purchase a sportbike manufacturer when there is virtually no sportbike market in the US.

  • MrDefo

    What does MV owe, $15 million? That’s not a lot to spend on some R&D for a good sportbike platform. Polaris wants to head in that direction, look at the Project 156 and their acquisition of the Empulse bike. Come to think of it, now Harley Davidson is starting to make some tentative steps into racing with their new flat tracker. Different area of racing, but still a performance bike. It’s not really being talked about, but maybe there is some kind of drive by Polaris (and now HD is wanting to follow suit) to be a genuine American racing company.

  • Dave

    Just out of curiosity (and off subject a bit), what leads you to say that Polaris can’t build a successful brand? I’m not a Polaris/Victory/Indian owner or rider by any means, but everything I’ve seen has shown their motorcycle figures grow and grow in popularity.

    http://www.topspeed.com/motorcycles/motorcycle-news/polaris-posts-fifth-straight-year-of-increased-motorcycle-sales-ar167378.html

    http://ir.polaris.com/investors/news/news-details/2015/Polaris-Reports-Record-First-Quarter-2015-Results-EPS-Increased-9-to-130-on-16-Sales-Growth/default.aspx

  • imprezive

    They’d need to pay off the loan and buy out AMG, so that’s $50M right there. That’s buys you a stake in a company that isn’t profitable and will need a cash infusion to get there and has a CEO that wants to keep running the company as he sees fit. It’s an easy $75-$100M for Polaris to get a reasonable stake in MV and get them back on track and that’s if they can talk sense into Castiglioni. That’s not crazy money but that’s pretty much best case scenario. It’s a lot cheaper to dump a couple million into a JV to help Polaris develop a Superbike or just hire some smart guys and do it themselves.

  • AMG didn’t loan any money to MV, they took an equity stake. AMG’s investment in MV though did allow MV to get a loan for 15 million euros. Other loans now total 35 million euros, so 50 million euros total in debt.

  • Brad

    This may be one of the silliest cmoments of my early days. Victory and Indian are by far the 2 best handling cruisers on the market. Steel braided brake lines from the factory? Polaris is a company that knows what to do the right way. This scenario may be the best possible plan for MV

  • imprezive

    I understand that which is why I said buy out AMG. So they need to purchase AMG’s equity in the company and pay off at least the 15M EUR loan that is contingent on AMG having equity. That gives them partial ownership of an unprofitable bankrupt company. And like you said that’s assuming they can just restructure the rest of their debt. So after spending all that money then they have to start the process of actually turning MV around which is another bucket of money. I stand by my $75-100M USD investment required if not more.

  • Superlight

    What do you mean, “turning MV around”? Yes, they still need a more competitive 1000cc superbike, but their 3-cylinder lineup is pretty complete.

  • Wayne Thomas

    You need to understand that companies are in the business of making money not motorcycles.

  • Superlight

    No, successful companies build products that satisfy human needs/wants. When they focus on the money alone they typically do a poor job meeting customer requirements.

  • imprezive

    While that’s a nice thought there is a reason they are bankrupt and we are having this discussion. Especially a motorcycle company needs more than just one competitive product. You need the dealer network and parts support. Plus having a range of competitive bikes would help, outside of the 3 cyl lineup the MV line is behind the curve. MV does not have a sustainable business right now, they’ve proven that by getting into serious financial trouble several times now.

  • Paul McM

    Have you actually ridden a large Victory or Indian? And have you ever ridden a motorcycle that actually DOES handle well? Some of the Indians may handle better than the most overweight Harley tourers (though not by much), but they are still pigs, with clunky transmissions, vague brakes, strange handlebar ergonomics, and weird controls. To me your assertion is like the “owned one bike ever” cafe racer guys who claim their bikes stop and turn so wonderfully — only because they have never, ever ridden a really good machine. I’ve been riding for 41 years — probably driven over 150 different types of motorcycles in that time. If you think Victory makes good-handing bikes, that only reveals that you don’t have a knowledgeable point of reference.

  • Superlight

    IMO MV has enough good product to be successful; in fact, probably too much on the 3-cylinder side (too many models). What they don’t have, as you so rightly note, is a good dealer network or parts support. I would have focused on fewer models done right and adding more dealer points. That said, I want to see MV survive, as no one does design better.

  • Brad

    Yes I have ridden great handling bikes. I have ridden poor handling bikes as well. Victory/Indian are good handling bikes for their class and weight. I feel your statement was silly. Polaris would come in and tighten up the management not mess with the quality of the bike.

  • Nicko55

    Beyond the “Polaris” brand itself, they’ve floundered spectacularly, especially with Victory, selling a few thousand and bikes per year, not even coming close to being profitable. The overarching brand of Polaris is successful for two reasons in my opinion: It’s been around forever, starting back in an era when the snowmobile market was fresh, with few players, and the second reason is because it’s an American company, which is all that legions of ignorant buyers need as reasoning to chose their products. Even though engineering-wise they’re miles behind much of the global competition.

    Don’t get me wrong, the Victory bikes themselves are solid, modern motorcycles (thought the first-gen bikes were definitely NOT), the main problem is Polaris hasn’t got the slightest clue how to market the brand and give it anything resembling an identity. Hence purchasing Indian because they couldn’t figure out how to make brand name themselves. A good idea really…

  • Paul McM

    Repeating my specific question. Have you, personally, ridden one of the big Victorys, such as the Vision Tourer with the weird tail section. I did and couldn’t wait to get off the thing. It was a pig. Bad suspension, wallowed in turns, weird feel on the brakes. Bars like wheelbarrow handles, and definitely high center of gravity. Bad news all around.