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Harley-Davidson target of takeover bid?


by Reuters

Harley-Davidson has been badly battered by the current economic crisis, with sharply decreasing sales and profitability, the financial losses from the Buell stoppage, and a $100M purchase of MV Augusta that has not produced any benefits so far. The unofficial buzz from other manufacturers at Bike Week 2010 in Daytona in early March was that H-D is running out of the cash it raised on the Bond market in mid 2009, and that a crunch is inevitable in the coming months. Given this scenario from hell, a weak H-D may be a target for someone with cash, a very sharp cost-cutting knife and an ability to make hard management decisions.

Harley-Davidson shares jumped 6% in value in relatively heavy trading these last few days, leading to speculation that the private equity firm Kohlberg Kravis Roberts may be preparing a takeover bid. And remember that financial guru Warren Buffet bought $300M worth of high yield bonds in 2009 and is not known for wasting his money on hopeless adventures, but rather on helping return sick companies to profitability as quickly as possible and make money doing it.

Concerned parties are not saying anything, which means they have not denied the rumour. In good times, H-D has been good as gold, and is still today a huge presence on the markets and in the hearts of the true believers. But they need new blood and some hard-nosed management to develop new customer bases to replace their aging old ones, and new technical solutions to meet green regulations in the coming five years.

Here’s to a strong(er) Harley-Davidson emerging soon from this!