Volkswagen considering Ducati sale

Volkswagen is considering selling off its Italian motorcycle brand Ducati either to India’s Hero MotoCorp or some Chinese brands. It is also reported that Volkswagen is cutting short its spending across all areas of operations including cutting jobs off at its core passenger car brand, to help pay for a multibillion euro shift to envelop electric cars and new mobility services.

The carmaker has entrusted investment banking boutique Evercore to evaluate possible options including the sale of Ducati brand, which its Audi division had acquired in 2012 for about €860 million ($935 million), and has also reached out to potential buyers but no decision has been taken on this front yet.

According to sources, Ducati made an EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) of nearly €100 million and yield a valuation of upto €1.5 billion or 15 times its core earnings. A banker close to the industry said that potential buyers were ready to offer an earnings multiple of more than 10.

Along with Hero and other Chinese companies, Ducati might even appeal to investors such as the consortium that bought Aston Martin in 2007. However, it remained ambiguous whether brands such as Honda, Polaris, Suzuki, Harley-Davidson were interested or not.

According to Audi’s annual report, Ducati posted sales of €593 million in 2016. However, if Volkswagen does not attract enough interest, it might list Ducati on the stock market as well as in go public.