TPG Agrees to Ducati Deal
December 5, 2005
Filed under Uncategorized
Texas Pacific Group, majority shareholder of Ducati Motor Holding S.p.A (NYSE: DMH, Borsa Italiana S.p.A: DMH), says it has agreed to sell its controlling stake in the motorcycle manufacturer to Italian private equity firm Investindustrial Holdings.
The “preliminary agreement” with Investindustrial was reached December 2 in London. Investindustrial admitted in August its interest in Ducati.
It was not confirmed whether Texas Pacific had agreed to sell its entire 35% share. While Reuters reported the deal included the sale of 29.9% of Ducati for €0.85 per share, Ducati North America Press Manager Vince Chiaro declined to comment.
“Unfortunately, because of the laws involving financial information and its effect on stock prices, etc., I have been asked to direct all inquires to our Investor Relations Manager, Fabrizio Nardi,” Chiaro said. Nardi was unavailable for comment for this edition of Powersports Business e-News.
TPG, a major private equity company with headquarters in Fort Worth and San Francisco, originally bought 51% of Ducati in 1996 when the finances of former parent Cagiva SpA soured. In 1999, the company recouped some of its investment when Ducati was floated on the stock market. Today, TPG's 35% share is worth approximately $79.3 million.
“We had always hoped to have Investindustrial as our partner for the re-launch of the company,” Federico Minoli, President and CEO of Ducati Motor Holding, said in a prepared statement. “The transfer of shares provides the guarantees that Ducati needs in order to continue its growth and reach the goals it has been working towards.”
The agreement with Investindustrial is subject to the approval of Ducati's banks.
“We will be working with all of our main banks, with the assistance of Unicredito Banca Mobiliare (UBM) to finalize the agreement as efficiently and quickly as possible,” Minoli said. “We expect to operate in a calm and harmonious way, combining forces and sharing results with those partners who have our same passion and pride for the worldwide success of Italian bikes.”
Ducati posted revenue of €382.8 million in 2004, when unofficial Ducati worldwide registrations were down 5.2% versus full-year 2003. For the first nine months of 2005, ended September 30, Ducati revenues were €240.3 million, down 10.0% from the same period in 2004. Ducati's net loss widened to €16.6 million from €9 million during the year-ago period.
Accounting for 75.6% of total revenues, revenues from motorcycles during the recent nine-month period decreased 10.5% to €181.8 million. Revenues from motorcycle-related products, including spare parts, accessories and apparel, were down 4.7% to €56.1 million.
With offices in London, Jersey, Madrid and Milan, Investindustrial (formerly 21 Invest) is independently managed by a team of approximately 20 professionals headed by Andrea C. Bonomi. The firm's focus is to be the sole or lead equity investor on investments of €15-75 million in target companies with sales of €75-350 million.
An investment partnership run by U.S. financier David Bonderman, TPG was founded in 1993 and has more than $20 billion under management. TPG has invested $65 million in a deal with Continental Airlines, purchased Burger King in 2002 for $1.5 billion, and is a major shareholder in the new US Airways/America West Airlines. TPG's latest deal is the pending $5.1 billion buy-out of The Neiman Marcus Group with Warburg Pincus.
Read the December 26 issue of Powersports Business magazine for more about the deal.