HARLEY-DAVIDSON ENTERS RACE TO BUY DUCATI

U.S. motorcycle maker Harley-Davidson (HOG.N) is lining up a takeover bid for Italian rival Ducati, potentially bringing together two of the most famous names in motorcycling in a deal that could be worth up to 1.5 billion euros ($1.67 billion), sources told Reuters.

Indian motorcycle maker Bajaj Auto (BAJA.NS) and several buyout funds are also preparing bids for Ducati, which is being put up for sale by German carmaker Volkswagen (VOWG_p.DE).

A deal with Harley-Davidson would bring together the maker of touring bikes like the Electra Glide that are symbolic of America with a leading European maker whose high-performance bikes have a distinguished racing heritage.

Milwaukee-based Harley-Davidson has hired Goldman Sachs to work on the deal, one source familiar with the matter said, adding tentative bids were expected in July.

Volkswagen, whose Audi division controls Ducati – maker of the iconic Monster motorbike – is working with investment boutique Evercore on the sale which will help it fund a strategic overhaul following its emissions scandal.

Based in the northern Italian city of Bologna, Ducati was on the wish list of private equity funds KKR (KKR.N), Bain Capital and Permira, which are all working on the deal, said the sources who declined to be identified as the process is private.

Ducati was launched in 1926 as a maker of vacuum tubes and radio components and its Bologna factory remained open in World War Two despite being the target of several bombings.

Ducati racers have won the Superbike world championship 14 times, with Carl Fogarty and Troy Bayliss its most successful riders.

Harley-Davidson, which commands about half the U.S. big-bike market, was founded in Milwaukee, Wisconsin at the start of the last century and was one of two major American motorcycle manufacturers to survive the great depression.

Demand for Harley’s motorcycles continues to be slow as its loyal baby boomer demographic ages and rivals such as the Indian brand bike maker Polaris Industries Inc (PII.N) and Japan’s Honda Motor Co Ltd (7267.T) offer discounts.

Volkswagen’s powerful labor unions, which control half the seats on the carmaker’s 20-strong supervisory board, repeated their opposition to selling the Italian motorcycle maker.

Ducati is a jewel, the sale of which is not supported by the labor representatives on Volkswagen’s supervisory board,” a spokesman for VW group’s works council said in an email.

“Harley-Davidson is miles behind Ducati in technology terms,” he added.

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