COULD Polaris be on the verge of adding MV Agusta to its catalogue of bike brands – joining Victory and Indian and once again taking the Italian firm into American ownership? That’s what Italian newspaper Corriere Delle Sera reckons is happening.
To be fair, Polaris is a name that’s been linked with every beleaguered bike maker for years. It was among the favourites to buy Erik Buell Racing and its recent moves with Victory – including buying Brammo’s electric motorcycle division and competing at Pikes Peak – suggest it’s got a growing interest in sports bikes.
It’s equally true that MV Agusta is in need of a gallant (wealthy) knight to come and rescue it from its latest financial crisis. Having been passed between several owners including Polaris’ deadly rivals at Harley-Davidson, the firm has been on its own for the last few years. Most recently it’s had some help from Daimler’s Mercedes-AMG arm, which owns 25% of the company, but MV is still haemorrhaging money. Daimler’s 2015 annual report shows that the firm has €67 million of equity in MV Agusta and that it suffered a loss of €23 million that year.
It’s understood that there’s a bitter battle going on between MV boss Giovanni Castiglioni and Daimler. He’d like to regain control of the 20% owned by the German firm, but MV’s debts are already huge – something in the region of €40 million is reported – and at least part of that debt is secured on Mercedes-AMG’s involvement. So should Castiglioni raise the capital to buy out Mercedes-AMG, he’d immediately need to repay millions more in debts that will fall due the moment the German company is shown the door.
Polaris, of course, has the financial clout to make all MV’s immediate financial problems go away, but the question remains as to whether or not the sums add up. Recently MV’s sales have been booming – they were up by 30% in 2015 – but despite that, the debts have racked up ever higher. The implication is that the bikes aren’t selling at a profit. Now, with the new European type approval regulations coming into force at the start of 2017, even more investment is needed to ensure that all MV’s machines are up to scratch.
Castiglioni has already applied for ‘concodato di continuita’, which is court-ordered protection from creditors to allow the company to remain in business, and has a plan to reduce production to around 5,700 bikes per year (down from 9,000). Prices for those bikes would, presumably, rise while costs would be reduced, tipping the balance in favour of profit.
At the moment there’s still no concrete proof that Polaris will make the leap, but it’s a clear favourite to do so.