Bajaj Auto reaches agreement with KTM to hike its stake to 30%

With 30%, Bajaj Auto will be the second-largest stake holder in KTM

Bajaj Auto, which had earlier announced its intent to increase its stake in Austrian two-wheeler manufacturer, KTM, to 30% and above, is now in the process of doing just that. According to Bajaj Auto, this is the right time to increase its stake in KTM because it would allow the company to take advantage of KTM’s currently low valuations, which are due to the global economic downturn

Rajiv Bajaj, MD – Bajaj Auto, has announced that his company has reached an agreement with KTM regarding the hike in Bajaj’s stake holding in the latter and that the deal would be completed over the next two months.

After the preferential allotment of new shares, KTM’s promoters will remain the largest shareholders in the company, with around 46%, followed by Bajaj Auto, with 30%. Bajaj, which has already invested Rs 800 crore in KTM, is expected to invest another Rs 100 crore for hiking its stake to 30%.

Bajaj and KTM are already working together on various new bikes for the Indian and European markets. These bikes are expected to be launched by early-2010.

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