Eicher Motors is currently finalising financing and structuring terms with a clutch of global banks to acquire Italian superbikes Ducati for $1.8 billion-$2 billion.
Eicher Motor shares rose as much as 2% to hit the intraday high of Rs 32,895 after the company is reportedly preparing to make a binding offer to acquire the iconic Italian superbikes Ducati for $1.8 billion-$2 billion. Economic Times reported that Eicher Motors, is currently finalising financing and structuring terms with a clutch of global banks and consulting companies ahead of the deadline, that was scheduled for this month end, citing sources.
Earlier in June, that U.S. motorcycle maker Harley-Davidson and India’s Bajaj Auto Ltd were among companies preparing bids for Ducati, which is being put up for sale by German carmaker Volkswagen, reported Reuters.
The shares of Eicher Motors have returned 47% in the year so far. Last week, the Gurgaon-based automaker reported a 22% rise in the sales for the month of August 2017. The total motorcycles sales for the month of August 2017 grew 22% to 67,977 units as compared to 55,721 units in the same month of previous fiscal.
The rise in the sales for August was due to the demand for its Royal Enfield motorcycles with capacity up to 350 cc, as shown in an exchange filing. There is an increase of 29% in the sales of the Royal Enfield bikes motorcycles with capacity up to 350cc as the company sold 63,637 units of it as compared to 49,481 units sold in the same month last year. However, the sales of models with capacity above 350 cc dropped 30% to 4,340 units versus 6,240 units in August 2016.
SP Tulsian, a reputed market analyst believes that the Eicher stock may see a lot of volatility in the next 12 months. According to him, the strategic tie-up between Bajaj and Triumph will impact Eicher Motors going forward. In conversation with CNBC TV18, SP Tulsian told recently, “ Dominar is already giving a tough competition to Royal Enfield.” According to him, this competition is set to intensify in the coming days. The analyst said that the introduction of new models by Bajaj is set to induce correction in Eicher Motors stock. “Market’s response to new launches by Bajaj Auto may increase the volatility of the stock. The stock may correct by Rs 800 to 1,000 on each news of new launches.”