BMW Motorrad To Takeover KTM?
It was in December last year that the Austrian motorcycle manufacturer KTM AG filed for bankruptcy. KTM announced an emergency restructuring on November 29th 2024, to buy itself 90 days to raise money and avoid a complete shutdown. This period extends up to late February. Now, it looks like BMW is interested in buying KTM, provided they get to shift its operations from Austria. This rumour was reported by some Austrian media and sounds legit at the moment.
BMW To Buy KTM: The Rumour
KTM reportedly has €2+ billion in debts. It is currently under self-administration. Creditors will vote on the restructuring Ried im Innkreis Regional Court. The motorcycle manufacturer is expected to pay back 30% of its debt by the end of May. And if creditors choose to not vote in KTM's favour, the company will have to declare complete bankruptcy.
In this critical juncture comes the report by oe24- an Austrian publication, which states that it has learned from an insider familiar with the restructuring that '(KTM's) insolvency administrator Dr. Peter Vogl has a preference for a specific buyer, called BMW Motorrad.'
BMW's Rumoured Intentions With KTM
According to the rumours, BMW Motorrad seems interested in buying out the KTM brand and continue it. There would, however, be some major changes in operations. oe24 reports that if the deal goes through, BMW would lay off KTM's entire workforce in Austria, and completely move the brand out of the country. The money saved thus could be channelled to the insolvency equalization fund.
This means that 4,500 people in Austria will lose their jobs. The current Austrian suppliers could also be affected as BMW would have its own supply chain and preferred vendors.
All future R&D of KTM bikes would be done in Munich, Germany and the production will be shifted to India. In India, Bajaj Auto already manufactures KTM motorcycles. If the deal goes through, BMW could build KTMs with the help of TVS Motors, its partner in the country.
The oe24 report has created some panic for sure. It says that the 'insider' warns "If the 4,500 jobs at KTM in Austria are lost, Mattighofen will become an industrial ruin. This will affect all suppliers in Austria, but also many dealers in the town." Austrians are already protesting against KTM's shut down and potential layoffs and this would only add to their concerns.
BMW Dismisses The Rumour
BMW Motorrad has remained 'mostly silent' about this rumour. Recently, however, a report by RideApart claims a BMW representative to have called this 'purely speculation'.
One More Reason To Say The BMW Deal Isn't Through Yet
Another report on oe24 says 'an insider also brought BMW into play on Sunday in connection with the Oberbank: "Will BMW Motorrad already transfer €780 million to Dr Peter Vogl (KTM's insolvency administrator)?"
Industry insiders and lawyers contradict this idea, as there must first be approval from all BMW committees; according to reports, the supervisory board of the listed BMW AG will not meet until March 15, until then there can be neither contracts nor payments to KTM or the insolvency administrator! This means that the German hasn't made any investments yet, and is likely not in the process of doing so.
Why We Think BMW Might Actually Buy KTM
On 'purely speculative' grounds, here are a few reasons why we think BMW might actually go ahead with buying KTM out.
KTM, as we know is a huge brand- with a desirable lineage and a line of interesting products. It can thus be a valuable addition for BMW Group.
Secondly, the Linz-based Oberbank is a major creditor of KTM Boss Stefan Pierer. Its CEO also has great relations with the BMW Group, as the bank itself happens to be the main bank of the BMW engine plant in Steyr. So, Oberbank would definitely have an added preference for BMW Motorrad as an investor.
Third, if BMW Motorrad plans to (partially) shift production to India ( an immediate complete shift will not be a wise choice), the ongoing partnership with TVS would enable them to manufacture KTM motorcycles here, with ease. This could play a part in profit maximisation.
And finally comes the MotoGP project. BMW has expressed its interest in potentially joining the sport, and KTM acquisition would make things easy for this dream to fruition.
Bajaj Auto To Invest In KTM?
Another set of rumours suggest that Bajaj Auto might pump nearly Rs 1,360 crores into KTM. Its subsidiary Bajaj Auto International Holdings BV (BAIHBV) based in the Netherlands holds 49.9% stake in Pierer Bajaj AG (PBAG). It controls 75% of Pierer Mobility AG- KTM's current parent company.
Bajaj hasn't confirmed investment plans officially. However, it has announced that the board has approved to invest 150 million euros (around Rs 1,350 crore) into Bajaj Auto International Holdings BV, Netherlands. These funds 'could be' used to revive KTM's sinking finances. Let's wait and see how this goes through...