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