harley Davidson buys Cagiva and MV Augusta

[NICKG]

Press Release:

Milwaukee, Wis. (July 11, 2008) - Harley-Davidson, Inc. (NYSE: HOG) today announced the signing of a definitive agreement to purchase the Italian motorcycle maker MV Agusta Group (MVAG). Under the agreement, Harley-Davidson will acquire 100 percent of MV Agusta Group shares for total consideration of approximately 70 million euros ($109 million), which includes the satisfaction of existing bank debt for approximately 45 million euros ($70 million). In addition, the agreement provides for a contingent payment to Claudio Castiglioni in 2016, if certain financial targets are met. MV Agusta Group is privately held, with the Castiglioni family owning 95 percent of MVAG shares.

The acquisition is expected to close in several weeks, pending the satisfaction of contingencies and receipt of regulatory approvals. Harley-Davidson intends to fund the transaction primarily through euro-denominated debt.

MV Agusta Group has two families of motorcycles: a line of exclusive, premium, high-performance sport motorcycles sold under the MV Agusta brand; and a line of lightweight motorcycles sold under the Cagiva brand. MV Agusta's F4-R motorcycle, powered by a 1078cc in-line four-cylinder liquid cooled engine, is rated at 190 hp. The company sells its products through about 500 dealers worldwide, the vast majority of them in Europe. In 2007, MVAG shipped 5,819 motorcycles. During 2008 MVAG has significantly slowed production due to financial difficulties.

"Motorcycles are the heart, soul and passion of Harley-Davidson, Buell and MV Agusta," said Harley-Davidson, Inc. Chief Executive Officer Jim Ziemer. "Both have great products and close connections with incredibly devoted customers. The MV Agusta and Cagiva brands are well-known and highly regarded in Europe. They are synonymous with beautiful, premium, Italian performance motorcycles," Ziemer said.

Harley-Davidson, Inc. plans to continue to operate MV Agusta Group from its headquarters based in Varese, Italy. Following closing, the first priority will be to appoint a leadership team to include a new Managing Director and to resume the manufacture of current models.

Current MV Agusta Group Chairman Claudio Castiglioni will continue in a leadership role as Chairman and will play a major role in future product development. Design Chief Massimo Tamburini will continue his leadership of MV Agusta Group's world leading sport-bike design studio.

"We take enormous pride in MV Agusta and Cagiva motorcycles," said Castiglioni. "Our riders seek an uncompromising experience in premium performance motorcycles. And with Harley-Davidson's deep understanding of the emotional as well as the business side of motorcycling, I have great confidence that our motorcycles will excite customers for generations to come."

According to Ziemer, the acquisition is intended primarily to expand Harley-Davidson, Inc's presence and footprint in Europe, complementing the Harley-Davidson and Buell motorcycle families. Retail sales of Harley-Davidson motorcycles have grown at a double-digit rate in Europe in each of the last three years, as the Company has increased its strategic focus on global markets.

"The acquisition of MV Agusta Group will enhance Harley-Davidson, Inc's position as a global leader in fulfilling customer dreams and providing extraordinary customer experiences. We look forward to a long relationship with the MV Agusta and Cagiva families of customers and employees," said Ziemer.

Conference Call
Harley-Davidson, Inc. will hold a webcast conference call regarding the acquisition from 8:00 to 8:30 a.m. (central time) today, July 11, with Tom Bergmann, Executive Vice President and Chief Financial Officer, Harley-Davidson, Inc. To access the webcast, please log on and register at least ten minutes prior to the start time at www.harley-davidson.com, under the Investor Relations section. A replay of the webcast will be available at the same location approximately two hours after the call concludes.

Company Background
Harley-Davidson, Inc. is the parent company for the group of companies doing business as Harley-Davidson Motor Company (HDMC), Buell Motorcycle Company (Buell) and Harley-Davidson Financial Services (HDFS). Harley-Davidson Motor Company produces heavyweight motorcycles and offers a line of motorcycle parts, accessories, general merchandise and related services. HDMC manufactures five families of motorcycles: Touring, Dyna®,Softail ®,

Sportster ® and VRSC™. Buell produces premium sport performance motorcycles and offers a line of motorcycle parts, accessories, and apparel. HDFS provides wholesale and retail financing and insurance programs primarily to Harley-Davidson and Buell dealers and customers.

Forward-Looking Statements
Harley-Davidson, Inc. intends that certain matters discussed in this release are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as Harley "believes," "anticipates," "expects," "plans," or "estimates" or words of similar meaning. Similarly, statements that describe future plans, objectives, outlooks, targets, guidance or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this release. Certain risks and uncertainties are described below. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this release are only made as of the date of this release, and Harley-Davidson, Inc. disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Although Harley-Davidson and MV Agusta Group have signed a definitive purchase agreement, there is no assurance that all of the contingencies will be satisfied or that the governmental approvals will be obtained in a timely manner or at all. The proposed acquisition may not occur if the conditions to completing the transaction are not satisfied in a timely manner.

In addition, Harley-Davidson intends to finance a portion of the consideration by borrowing funds and its level of indebtedness may increase as a result, which may cause Harley-Davidson to incur additional interest expense and limit Harley-Davidson's ability to obtain additional financing. It could also increase Harley-Davidson's exposure to general adverse economic and industry conditions and adversely impact Harley-Davidson, Inc.'s earnings per share. Furthermore, Harley-Davidson may have challenges successfully integrating or profitably operating the business of MV Agusta Group.

[The Gaijin]

Wow. One day they will run out of ageing baby boomers who remember Brando and are actually planning for a future??

Somebody call GM, Ford and Cerberisiss (or whatever they call it).

[m21sniper]

Harleys will never go out of style.

[Seric]

Originally Posted by m21sniper

Harleys will never go out of style.

To bad neither will RUBs.

[BeyGon]

Has Harley had a worthwhile roadracer lately, if not, I see one in their future. At least with Harley's name on a MV.

[m21sniper]

Originally Posted by Seric

To bad neither will RUBs.

RUBs? I detect an acronym.

[Gogar]

Rich

Urban

Biker.

I think!

[Seric]

Originally Posted by Gogar

Rich

Urban

Biker.

I think!

Yessir!

All I ask is that Harley leaves MV alone so they can keep making some of the best bikes on the planet.

[Jeff Higgins]

Odd turn of events. Ducati management was on record as having approached Harley to propose a similar deal. I wonder what they will have to say about this. Harley financial backing behind MV Agusta could spell hard times ahead for Ducati.

[azasadny]

Last year I believe there was a rumor floating that HD was going to buy Ducati...

[Normy]

HD can only be improved by the inclusions of these two brands. Perhaps someday they will figure out a way to stop all the oil leaks~

-I'm not sure why someone hasn't tried to buy HD themselves yet. Porsche is the perfect company for this, since they market to the same audience for the most part, and the link-up between these two old, historical companies is fairly logical. Hell, the V-Rod might as well be called the "P-rod" for all the Porsche engineering in the engine!

N

[BlueSkyJaunte]

There were rumors some years ago about HD buying KTM, too.

Didn't Cagiva own Moto Guzzi at some point? It's too damn confusing.

This can't spell good news for Buell, though.

[911boost]

I love the folks throwing the 'Rub" acronym around.

I guess working hard and being able to afford some toys is a bad thing nowadays.

I wonder what an appropriate acronym would be for the owner of a slow ass leaky 3.2 Targa?

I've had rub the bone by my avatar for years btw.

Bill

edit: I agree, if I worked for Buell I might start looking for a new job. I have never been a fan of them anyways, maybe its because I am taller than 5-8. Any of you tall guys trying sitting on one of the newer ones? I felt like a praying mantis...

[Jeff Higgins]

I think Buell will be just fine. They just spent a good deal on development of the new Rotax powered bike, so it looks like they may already be distancing themselves from H-D.

H-D is in both the most envied and one of the most lamentable positions in the motorcycle market. They have the most loyal customer base of any consumer product, bar none. The flip side is that customer base expects certain things. Harley simply cannot sell a "modern" motorcycle; they are inextricably linked to their v-twin platform. Now, with other brands under which to sell motorcycles, that is about to change.

Buell was never far enough from H-D to attract sport bike riders. It was never close enough to attract Harley riders. I can see them dropping the Sportster motored bikes in a year or two, once the Rotax is dialed. I can see them drifting more towards the Cagiva/MV end of the business. I think the Rotax bike is the tip of that iceberg. There may very well be a market for an American sport bike, as long as it's not a "Harley".

[911boost]

Good points Jeff.

[GDSOB]

I've heard the Buell guys get lots of grief from the HD dealers parts and service. Can you imagine how the MV/August line will be supported at the dealer level?

[LakeCleElum]

This is mostly about HD trying to sell more of their product in Europe than anything else...Cagiva and MV Augusta have each gone thru a few financial bailouts......HD has to do something to bring in younger riders as us old Fuchs fade away.

[varmint]

Originally Posted by GDSOB

I've heard the Buell guys get lots of grief from the HD dealers parts and service. Can you imagine how the MV/August line will be supported at the dealer level?

true, i know from first hand experience.

go to the local hd dealership, and look at the knuckle draggers in service. do you really want these guys working on your highly tuned italian inline four?

[Tim Hancock]

Note to self: Add two more brands to my current list of vehicles I WILL NEVER OWN again (Ford, Chevy, Dodge and HD)

[Jeff Higgins]

Originally Posted by GDSOB

I've heard the Buell guys get lots of grief from the HD dealers parts and service. Can you imagine how the MV/August line will be supported at the dealer level?

I would bet they won't even be in the same building. Dealerships that have sold multiple brands (in addition to Harleys) had been told years ago to split them up. Most of our local dealerships have done so. I believe we are nearing the end, or have already exceeded, the grace period H-D had given them. Nothing wrong with this; we would not expect to see new Fords and Chevys on the same lot.

I can see H-D establishing an entirely separate business in sport bikes. Financially all under one roof, but almost impossible to tell (for the buying public) that they are all together at the corporate level. It just makes sense to establish to entirely separate identities. The motorcycling world would never stand for any sort of cross breeding. The Harley riders feel very strongly about that, as does everyone else.