HERO BUYS BIG STAKE IN BUELL

India’s largest motorcycle manufacturer Hero MotoCorp has bought a 49.2 per cent shareholding in Erik Buell Racing (EBR) for £16.4m. Hero already had a design and technology sourcing agreement with the US niche sports bike maker, established just over a year ago.

India's Hero- big Buell stake

“This is the first time that Hero has gone out of India to buy equity in a company,” said Hero chief executive Pawan Munjal. “It extends our relationship. We will be working with EBR even more closely now and get into selling and marketing of both EBR and Hero brands in both international and domestic markets.”

To facilitate the acquisition, Hero incorporated a wholly-owned subsidiary in the US and has put £9.9m up-front. The balance will be paid upon completion of the deal. Hero will play a more active role in the operations of EBR, which will now also function as an extended R&D arm of his company, Munjal added, with two directors on the EBR board. However, EBR will continue to be headed by its founder, chairman and chief executive Erik Buell.

Hero reportedly expects EBR’s annual manufacturing capacity to reach 20,000 units within the next five years — although it only sold 65 bikes in 2012.

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