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.”