Ducati shareholders Investindustrial, BS Investimenti and Hospitals of Ontario Pension Plan (HOPP) intend to launch a €390.8 million ($579 million) bid to purchase the 70 percent of the motorcycle manufacturer they don't already own.
Private equity firm Investindustrial owns 15.6 percent of Ducati Motor Holding, SpA; Canadian pension fund HOPP owns 7.4 percent; and BS Investimenti holds about 7 percent. They're offering to pay a maximum of €1.70 per share if all Ducati shareholders tender their shares of issued capital.
Hoping to complete the purchase through a newly formed investment vehicle named Bidco, the three shareholder organizations say they plan to consolidate their stakes in the OEM and then delist the company from the Milan stock market. They plan to fund about 50 percent of the bid, with the remainder financed by bank Intesa Sanpaolo SpA.
Ducati said it was surprised to learn of the shareholders' intentions through a press release.
"No evaluation has been made and no declaration can be released in reference to the planned merger," the Ducati board of directors said. "The company has learned of such hypothesis from said press release and, therefore, has no other information than that which is contained therein."
The board then appointed Mediobanca S.p.A. as a financial advisor, tapped to examine a formal proposal.
Ducati achieved a net profit of €13.3 million in 2007, up from a debt of €8.5 million in 2006. The company's motorcycle shipments climbed 18.7 percent to 38,365 bikes, and unofficial worldwide registrations grew 16.2 percent to 40,789 units.
The Milan Stock Exchange closed Feb. 29 with Ducati trading at €1.66 per share. The stock hit a high of €1.69 per share Feb. 20 and a low of €1.03 per share Jan. 11.
Citi Investment Research, a division of Citigroup Global Markets, Inc., gives Ducati stock a "medium risk" rating, with a €1.26 per share price (down from €1.50 per share). Citi cites a difficult macro scenario, with consumer spending at risk, especially in the United States (which accounts for 24 percent of the company's sales).
Ducati's bike shipments to North America rose 22.3 percent, from 8,269 in 2006 to 10,110 in 2007; unofficial registration figures for Ducatis in North America rose similarly by 22.4 percent, from 8,186 in 2006 to 10,019 last year.