Bajaj Auto Ltd has restarted talks to transfer its stake in KTM AG to the Austrian motorcycle maker's parent firm Pierer Mobility AG for simplification of the shareholding structure.
Currently, Pierer and Bajaj, via its unit Bajaj Auto International Holdings BV, hold around 51.7% and 48% stake, respectively, in KTM, said the Indian company in a stock market disclosure.
Pierer Industrie AG, a part of the Pierer group that holds over 60% in Pierer Mobility, and Bajaj, will now evaluate the proposals in detail.
As part of the proposed transaction, Pierer Industrie and Bajaj will move their stakes in Pierer Mobility to a new company PTW Holding AG. Pierer Mobility's stake in KTM AG will increase from 51.7% to around 99.7% after the transaction.
If the proposal fructifies, Pierer Mobility will consider the legal and economic requirements as well as capital increase by contribution in kind from the existing authorised capital of the company.
"The authorised capital enables a capital increase of up to 50% of the existing share capital," it added.
The discussions are currently at a very preliminary stage and this disclosure is being made only by way of abundant caution, it noted.
Bajaj and Pierer had held discussions for this proposed plan last year in March as well.
KTM was founded by Stefan Pierer, who continued to head the company even after Bajaj took a significant stake in the motorcycle maker.
Bajaj had initially bought a 14.9% stake in KTM for around Rs 300 crore in 2007. The deal was done in the midst of the financial crisis. The Indian company had gradually hiked its stake in KTM and the performance of the European firm is said to have improved after the partnership with Bajaj.
Bajaj said in its annual report that KTM sold 213,949 motorcycles in 2019 (calendar year) as compared with 211,931 motorcycles in the previous year.
KTM recorded a turnover of €1.51 billion in 2019 as compared with €1.45 billion in the previous year. Its profit after tax was €84.6 million in 2019 versus €89.8 million in 2018.
