Reuters announced today that VW’s Audi unit has agreed to purchase Ducati for “about 860 million Euros ($1.1 billion Canadian), including assuming debt of about 200 million Euros.
Reactions of the markets were generally that VW boss Ferdinand Piech was trophy hunting. “The Ducati purchase is driven by VW’s passion for nameplates rather than industrial or financial logic,” said Arndt Ellinghorst, analyst at London-based Credit Suisse. “It’s an unnecessary sideshow to VW’s main challenges of integrating sports-car maker Porsche and merging truck operations at MAN and Scania.”
Other analysts shrugged, saying VW chose its luxury brand to buy the brand since Audi can claim rival BMW also has a motorcycle business to enhance its sporty image, thus lending the deal a fig leaf of justification.
Barclays Capital analyst Michael Tyndall said, “Consider for a moment that Volkswagen’s business generates something close to 8 billion euros in free cash every year. The company either has to find investments to enhance its return on capital or it needs to return the extra cash to shareholders.”
[…] may be a reflection of new found stability in the company itself, which a few years ago was acquired by Audi,the premium division of automotive giant VW. New management, new money and perhaps a re-energized […]
[…] then Subsidiary B has more leeway to build gas guzzlers. Supposedly, that was part of the reason VW bought Ducati, and Daimler could certainly have the same plan in […]
Italian styling, german engineering, japanese quality.
Oh well…two out of three ain’t bad.
Does that make it Ducaudi?