The thing that got me is that MV sold an entire 330 bikes last year in the US. Granted, I've never seen one on the road around here, but didn't think they were that rare in the US.
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Harley-Davidson to buy Italian bike maker MV Agusta for $109M, increase European presence
July 11, 2008: 04:29 PM EST
NEW YORK (Associated Press) - Harley-Davidson Inc. said Friday it will buy Italian motorcycle maker MV Agusta Group for about $109 million to boost its presence in Europe, giving it entry into the popular performance bike market there.
MV Agusta makes a line of premium sport motorcycles under its name brand and a line of lightweight motorcycles under the Cagiva brand.
The deal will help Harley-Davidson expand into the European market as sales slump in the U.S., where consumers are pulling back on spending. Performance, or sport, bikes account for about 80 percent of sales in Europe, Harley-Davidson Chief Executive Jim Ziemer said. Harley-Davidson's sales there have been growing in the double digits for the past three years, and the company now has nearly 10 percent of that market.
The MV Agusta aquisition gives Harley-Davidson a chance to go after European sport motorcycle riders, who tend to be younger than U.S. motorcycle riders, Ziemer said.
Sport motorcycles are typically high performance and require riders to lean forward. Heavy weight motorcycles like Harley-Davidson's top-selling touring bikes are heavier and allow for a more laid-back riding style since drivers can sit upright.
The heavier-weight bikes are more popular in the U.S., but worldwide, sport motorcycles account for half of all sales. It's a big market for Harley-Davidson to enter.
"This gives us a better way to get into that and understand that customer base at a different level than we're currently playing at," Ziemer said.
Shares of Harley-Davidson fell 37 cents, or 1.1 percent, to close at $33.33 on Friday. The stock set a new 52-week low of $32.33 earlier in the day. It has traded as high as $62.99 in the past 52 weeks.
The deal is expected to close in several weeks. It will paid for through euro-denominated debt, Harley-Davidson said.
The purchase price includes Harley-Davidson assuming MV Agusta's existing bank debt of about $70 million.
MV Agusta is privately held, and the Castiglioni family owns 95 percent of its shares. Under the agreement, Harley-Davidson will pay Claudio Castiglioni, who will continue to serve as chairman, additional payments in 2016 if certain financial targets are met.
MV Agusta will keep operating from its headquarters in Varese, Italy.
Harley-Davidson will appoint a new managing director once the deal closes.
MV Agusta is considerably smaller than Harley-Davidson, which has nearly half the U.S. market. The company has about 500 dealers worldwide, the majority of them in Europe, and in 2007 it shipped 5,819 bikes. Harley-Davidson shipped 330,619 bikes last year and has a network of about 1,300 dealers.
In the U.S., MV Agusta has about 45 dealers that sold 330 bikes last year.
Harley-Davidson noted MV Agusta significantly slowed production this year due to financial difficulties.
MV Agusta's bikes are considered premium, high-end bikes and typically sell in a range of about $14,495 to $24,995 in the U.S. Some sell for even more, with special editions fetching $120,000. In the upcoming Batman movie "The Dark Knight", Bruce Wayne _ Batman's alter ego _ will ride a new MV Agusta F4 superbike.
Harley-Davidson's bikes range from $6,695 to $34,995, with the average about $15,000.
UBS analyst Robin Farley said in a research note that the purchase could be considered an investment since MV Agusta may be operating at a loss and might not make money for several years.
Craig Kennison, an analyst with Robert W. Baird, wrote in a note that the deal gives Harley-Davidson room to expand into the large sport bike market. He estimated those bikes accounted for one-third of the U.S. market.
"The deal is promising in that it gives Harley a premium sport bike brand, expands its manufacturing footprint, and highlights its under appreciated opportunity in Europe," he wrote.
Harley-Davidson is due to announce its second quarter earnings next Thursday. The company recently announced a plan to cut 8 percent of its work force and trim bike shipments by the thousands as domestic sales fall.
Yeah, but it won't be virgin.... 
