Undoubtedly fueled by Audi’s purchase of Ducati Motor Holding, rumors out of Italy now peg Fiat to acquire MV Agusta. While neither party will talk about the rumors, it is no secret that MV Agusta is in need of more cash, as the company had difficulty securing credit after the Castiglioni’s repurchased the company, now debt free, from Harley-Davidson.
This has lead to the Varese brand releasing a rapid succession of closely related motorcycles in an effort to bolster sales and penetrate new market segments: the MV Agusta F3, MV Agusta Brutale, MV Agusta Rivale, MV Agusta Turismo Veloce, and MV Agusta Dragster. The company’s financial position has also fueled CEO Giovanni Castiglioni to talk last year about a possible IPO by as early as 2016.
The position of MV Agusta’s rocky financial situation makes the Italian company a poor target for an IPO. Instead, investment by private equity firm or an acquisition by a larger company, like Fiat, would be MV Agusta’s best bet for capital injection and business stability. Add to that, there is a certain Italian romance to the Turin-based Fiat brand acquiring MV Agusta, which is just down the street in Varese.
Is there any truth to these rumors? Only the respective parties can know. Without a doubt, such a move would be a huge boon to MV Agusta, and could do a lot to secure the company’s future. However, it is much harder to understand such an action from Fiat’s point-of-view.
MV Agusta would require substantial resources from Fiat in order to become even a self-sustaining business venture, add to that the amount of money it would require to grow MV Agusta into something that would significantly add to Fiat’s bottom line.
With the way European regulatory laws work, there is some value for car company to have a motorcycle subsidiary, however those advantages primarily benefit brands that don’t do a great deal of volume on high-efficiency, low-foot print, vehicles (read: Mercedes-Benz, Porsche, Audi, etc).
With Fiat already a leading European brand in this regard, the non-monetary benefits of having MV Agusta are simply just not there for the Italian automaker.
With analysts still not sure about the benefit of the Ducati/Audi deal, and MV Agusta only a fraction of the company that Ducati was when it was acquired, there is certainly a lot of wisdom to question. We bet Fiat could get a killer price though, and crazier things have happened. Stay tuned on this one.