When 2 years ago Harley-Davidson bought Italian motorcycle maker MV Agusta for $109 million the US was already in a deep recession, Harley sales were sagging with a management extremely worried about its core baby-boomer customers getting older and losing their will to ride a motorcycle. MV Agusta was also in financial trouble.
Harley-Davidson never explained how this acquisition would help them acquire younger motorcycle enthusiasts. Was it an exchange of technology, an extension of the number of dealerships abroad, both? The only things we know is that the strategy didn’t work if even implemented. Then, in October 2009 new Harley President Keith Wandell announced his intention to sell MV Agusta as part of a new corporate strategy to focus resources on the Harley-Davidson brand. No potential buyers being found, Harley-Davidson announced on August 6, 2010 that the company “had concluded the sale of its subsidiary, MV Agusta, to Claudio Castiglioni and his wholly owned holding company, MV Agusta Motor Holding”, Castiglioni being the former owner of the Italian motorcycle maker.
Immediately I reported that it looked like Harley-Davidson gave back MV Agusta to its former owner and that Harley being a public company it would have to report to the SEC (Securities Exchange Commission) the terms of the transaction. As a matter of fact the Wall Street Journal just reported that the 8-K filing with the SEC shows that Harley essentially paid MV Agusta’s former owners to take it back. The financial newspaper explains the content of the filing showing 1- that Harley had previously wrote-down $162.6 million for the fair value of MV Agusta and began treating the unit as a discontinued operation after announcing its intention to sell it a year ago. 2- that Harley anticipates additional related losses from discontinued operations in the third quarter of 2010. 3- that Harley received “nominal consideration” from Cariglioni for the transaction. In a subsequent interview a Harley-Davidson spokesman said that the specific amount it received was $3 Euros.