By Arno Schuetze
FRANKFURT (Reuters) – Volkswagen <VOWG_p.DE> is considering a possible sale of Italian motorcycle maker Ducati as Europe’s largest carmaker streamlines operations to help fund a strategic overhaul following its emissions scandal, two people familiar with the matter said.
Volkswagen (VW) is reining in spending across the group, including cutting thousands of jobs at its core passenger-car brand, to help pay for a multibillion-euro shift to embrace electric cars and new mobility services.
VW has tasked investment banking boutique Evercore <EVR.N> with evaluating possible options including a sale of the Ducati brand, which its Audi division <NSUG.DE> acquired for about 860 million euros ($935 million) in 2012, the sources said.
While Wolfsburg-based VW has started reaching out to potential buyers to sound out their interest, no decision has been taken on whether the brand will be sold, they added.
VW referred to Audi for comment. Audi and Evercore declined to comment.
One of the sources said Ducati made annual earnings before interest, taxes, depreciation and amortization (EBITDA) of roughly 100 million euros and could fetch a valuation of up to 1.5 billion euros, or 15 times its core earnings – a multiple similar to that of Italian supercar maker Ferrari <FCHA.MI>.
A banker close to the industry said potential buyers were likely to offer VW an earnings multiple of more than 10.
The motorbike maker may appeal to peers in China, India’s Hero <HROM.NS> or investors such as the consortium that bought British sports car maker Aston Martin in 2007, the sources said.
“It is an asset for trophy buyers with bigger interest in the brand than in the technology,” one of the people said.
Private equity firms could also be attracted to a brand whose motorcycles have won the Superbike racing competition 17 times, the sources said.
It remained unclear whether large competitors such as Polaris <PII.N>, Harley Davidson, Suzuki <7269.T>, Honda <7267.T> or Kawasaki <3045.T> might be interested, they added.
If VW does not attract sufficient interest, it may also consider a stock market flotation for Ducati, the people said.
Analysts questioned Audi’s purchase of Ducati when it was announced in April 2012, saying the deal had no economic or industrial logic and just reflected former VW Chairman Ferdinand Piech’s passion for the Italian company’s expertise on design and light engines.
But Piech has since bowed out as chairman and agreed earlier this month to sell the bulk of his stake in the Porsche SE <PSHG_p.DE> family holding that controls VW to his younger brother.
VW said last June it would review its portfolio of assets and brands, rekindling speculation among analysts that “non-core” businesses such as Ducati or a diesel-engine business for machinery could be up put for sale.
Chief Executive Matthias Mueller, asked by Reuters at the March 14 annual press conference whether this review had reached any conclusions, said VW still had nothing to announce.
Ducati posted sales of 593 million euros in 2016, according to Audi’s annual report. Audi’s motorcycle unit, of which Ducati is a part, made adjusted earnings before interest and taxes of 51 million euros in that year.
(Additional reporting by Andreas Cremer and Irene Preisinger; Editing by Maria Sheahan and Mark Potter)