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Issue link: https://magazine.cyclenews.com/i/128389
Polaris Buys 24 Percent of KTM P olaris Industries Inc. has announced that it will purchase a 24-percent interest in KTM Power Sports AG and will partner with KTM on several strategic projects. The goal of the partnership is to strengthen the competitive position of both companies and provide tangible benefits to customers, dealers, suppliers and shareholders, according to Polaris. According to a release issued by Polaris last week, during the first phase of the partnership, each company will continue to be run separately but will work together on several specific cooperative projects involving new product development. engine technology sharing, distribution, manufacturing and purchasing. This initial phase of the partnership will last approximately two years and, in addition to the cooperative projects, will involve the following: Polaris will purchase a H-percent stake in KTM Power Sports AG from an institutional investor for 66.6 million euros (approximately $80 million) funded from Polaris' existing bank line of credit arrangement. This represents approximately a 12-percent discount to the market value of the shares purchased reflecting the size of the block of shares purchased and the fact that the shares are thinly traded. Polaris CEO Tom Tiller is expected to be named to the KTM supervisory board after the closing date of the transaction; KTM CEO Stefan Pierer is expected to be named to the Polaris board of directors after the closing date of the transaction. There are no changes in employment anticipated at either company as a result of this announcement, according to Polaris. Additionally, Polaris and KTM Power Sports' largest shareholder, Cross Industries AG, have entered into option agreements that, under certain conditions in 2007, either Cross may purchase Polaris' interest in KTM Power Sports AG or, alternatively, Polaris may become the majority shareholder of KTM Power Sports AG, the release states. In the latter case, the :~~~~~~~~~:~~i~ljl~~~~li;~ to Cross will be settled in Polaris shares and Cross will become a majority of the purchase price significant shareholder in the combined Polaris/KTM organization. Cross' principal shareholders are Pierer and KTM CFO Rudolf Knunz. The exercise price under both option arrangements is based on market-based, predetermined pricing formulas to be derived from operating results of both companies in 2007. During the initial stage of the agreement, KTM will supply engines to Polaris, according to KTM. KTM will also do the final assembling of Polaris ATVs in Austria for distribution to the European market. This will speed up KTM's plan to produce its own ATV at some point, according to KTM. "I believe this partnership will provide substantial benefits to both Polaris and KTM, and both company's dealers, employees, suppliers and shareholders for many years to come," Tiller said. "We have long admired the success of KTM and are excited about working together to strengthen both companies. Polaris can benefit from KTM's substantial experience in motorcycles, an outstanding brand, leading technology, and a solid manufacturing presence and dealer network in Europe. Moreover, this relationship complements nearly every aspect of Polaris' five-year strategic vision, which is a road map to make Polaris the most dominant brand in the powersports industry. Further, we believe the two-step approach we have outlined significantly lessens the cultural and Top Racing Stars, Celebs To Lap for Life Some of the AMA Superbike Championship's factory stars and at least two Hollywood celebrities will be among the participants of 2Fast Motorcycle Track Days & Instruction (www.2-fast.org) and Renton Motorcycles' Seattle 100 lap-a-thon to benefit victims of kidney disease at Pacific Raceways in Seattle, Washington, on July 30. The Seattle 100 was initiated three years ago by 2Fast Motorcycle Track Days & Instruction's Brian Orton, along with friends and family who also rode motorcycles. Orton knows about kidney disease firsthand: His son was diagnosed with Nephrotic Syndrome at 10 months of age, and the effects of the disease were devastating. To help his son's own chances of a cure, he not only founded the NephCure Foundation with another parent in 2000, but he has continued to raise money for the battle against kidney disease every year. Rather than put his efforts into a typical fund raiser, Orton instead decided to utilize his love of motorcycle riding to develop a unique charitable event. With his sportbiking 10 experience and his desire to show the positive side of motorcycling, Orton came up with the idea of attempting 100 laps around Seattle's Pacific Raceways. "Three years ago, my dad and I - along with our riding buddies - put the Seattle 100 on the map," Orton said. "Others saw and heard about what we did, thought the idea was unique and fun at the same time, and jumped aboard. Now, three years later, the Seattle 100 is a huge hit. This year, for instance, we have filled all of our available riding spots - and the guest list of VIPs includes some famous people inside the world of motorcycle racing and, now, even outside. Joining Orton and guests are several VIPs and celebs offering their support, including well-known actor/comedian/producer David Alan Grier, actor Mark Paul Gosselaar formerly of "NYPD Blue" fame and Speed TV's "Two Wheeled Tuesday" host Greg White, as well as Superbike star Jake Zemke of American Honda, Supersport star Jason DiSalvo of Team Yamaha, Josh Hayes of AUGUST 3,2005 • CYCLE NEWS execution risk associated with a partnership of this magnitude. "In essence, this partnership combines the substantial strength, passion and success of two industry leaders with very similar, successful 50-year histories, but who do not compete directly today. It is a very natural fit for both of us." Pierer added: "Polaris and KTM complement each other very well, and we are very excited about our new relationship. 8y join- Attack Kawasaki, former 200 I and 2002 Superstock Champion Jimmy Moore of Hooter's Suzuki, star privateer and Superbike front-runner Jake Holden of Lion Racing, and Michael Czysz, along with his MotoGP concept-bike known as the Motoczysz. "Having David Alan Grier and Mark Paul with us is such an awesome honor," Orton said. " Hopefully next year's event will include a few other names, because I'd love to get Brad Pitt, Tom Cruise or Matt LeBlanc out with us, too." In 2003, Orton and roughly 15 other riders circled the Seattle racetrack over 100 times in an effort to raise money for children and families battling kidney disease. In 2004, the same event grew to 60 participants and grossed $70,000 in donations. On July 30, roughly 100 riders will join Orton and the staff of 2Fast to hopefully exceed their goal of $100,000. For more ing forces, we believe we can strengthen KTM's presence in North America, reduce our production costs, spread our development costs over a larger base and substantially accelerate our entry into the ATV business. We also look forward to sharing both chassis and engine technology with Polaris. The KTM and Polaris teams should work well together - both companies are driven by innovation, passion, and demand success." information, visit the 2Fast website at www.2-fast.org on the Internet and click on the Seattle 100 link. Jason DiSalvo is scheduled to be among the factory road race stars lapping Pacific Raceways during the 2005 Seattle 100, a benefit for the NephCure Foundation battling kidney disease.