Anyone who knows me knows I love all motorcycles, but Italian bikes have a special place in my heart. So this story is especially important for me as someone who loves Italian motorcycles.
This started as quite a simple news story, that was until I noticed some of the discrepencies and contradictions released as news. The rabbit hole just kept getting deeper, and what is going on with the MOTO 2 team needs a whole other video.
If I have got any of the facts wrong I would be interested to hear what, so let me know in the comments below.
A quick thank you goes out to MisterHelmet too. I have linked one of his video’s in the description. Some information he found helped me to piece more of the real story together. Sometimes there is no substitute for local knowledge. If you speak Italian it is worth a listen.
So, Let’s talk about MV Agusta and the KTM investment because there is news!
During the process of due diligence KTM have already found discrepancies with what MV declared at the time of the agreement.
A New Board
The first decision made after the investment made by Pierer Mobility was to restructure the board at MV. At the helm now if you don’t know is Timur Sardarov, the son of Rashid Sardarov, an Oligarch who is often cited as the richest man in Russia. It has been confirmed he will continue for now, but he is to be joined by a new president, the banker Massimo Ponzellini, a European banker already prosecuted for embezzlement in 2017.
They are joined by Luca Martin (CEO of KTM Asia) and Verena Schneglberger-Grossmann (KTM group Chief Legal Counsel) as representatives of Pierer Mobility.
Sardarov describes himself saying “Yes I do ride motorcycles, but I am a car guy really” and none of the board have any previous links to the Italian motorcycle industry. Luca Martin as the only board member with any connection with the motorcycle industry and he had no connection before 2018 and has a background in business operations, finance, and business development.
The first task was for Verena Schneglberger-Grossmann to complete the due diligence but this has proven very difficult.
Originally Pierer Mobility put in 15 million euros for 25% of the company. This meant KTM valued the company at 60 million euros before they looked deeper. This figure has to be weighed against the companies liabilities which I look at later. Now Pierer Mobility are saying it is worth considerably less. When they entered the company, the Austrians were reportedly very disappointed, and discovered some things that they considered less than honest.
From the point of view of the inventory, the reality is that what was found did not correspond to what was declared at the time of signing. There were missing bikes, missing parts and much more. In short, a mess.
A Takeover?
The risk is that this could lead to the Austrians taking a much larger percentage of the company without investing any more money. If my sources are correct they could eventually take away 100% of MV for less than 40 million and this could happen as early as late 2024.
Timur Sardarov as I have said is the son of Rashid Sardarov, the richest man in Russia. Regardless of your particular political views this has consequences. As CEO and managing director, he had put up the money to keep things afloat, but with sanctions since the Ukraine war, newspapers report he has had his yacht seized, and the latest money destined for MV has been delayed. Now it is said to be coming not from Europe but from the Caymans. His three-year contract as managing director would be valued at 3.6 million euro, or 100 thousand euro per month.
More Lay-Offs
This is being paid at a time when many employees have not taken their salaries since September, with 60 lay-offs already implemented and others planned. All these agreements should have been signed by November 15 because there were more salaries to be paid and the money was simply not there.
Then there are the rumours of contribution irregularities for the last three years. The company is said to be without a DURC, the Italian certification of labour compliance, with arrears of about 12 million euro in unpaid contributions. If this is true, it is only a matter of time before the Italian courts start proceedings. This means that even with an agreement, which they haven’t yet applied for, the company would still need 8 million euro to clear the deficit. MV Agusta could not afford irregularities of this kind and it seems like Pierer Mobility are now its only option to raise the funds.
Mounting Debts
What KTM discovered, even before starting the actual due diligence, is a critical situation to say the least:
17 million euro’s is owed to the suppliers.
8 million euro’s, as mentioned, is needed to close the agreement with the DURC on the 12 million euro for unpaid contributions and they could also be liable for further penalties.
50 million could also possibly be added for compensation demanded by the Loncin Group for a default by MV relating to an unsuccessful partnership for the production of small capacity motorbikes like the 5.5 Adventure bike which is effectively a rebadged Benelli.
Also pending is a lawsuit with Giovanni Castiglioni for the use of the Cagiva brand. Although
still at the preliminary stage, Castiglioni is likely to press for this, although figures are still to be confirmed.
There is even another 9 million euro’s for unpaid fees and royalties relating to versions of the F4 dedicated to Claudio Castiglioni.
These are not all debts yet as such, but they are all risks that must be budgeted for, and the total sum of the numbers just listed makes almost 100 million in possible liabilities and debts.
Then there are warehouse management costs, and the cost of the production of new motorbikes.
More money is needed for all these activities because at the end of the day if you do not have motorbikes to deliver, you cannot sell them, or at least that should be the case.
Dubious Business Practices
Because another rumour that needs to be verified is the report of “Atypical behaviour” on the part of MV. This is the story that dealers were invoiced for motorbikes that could not be delivered. The invoices would be passed on to the banks to be discounted by a certain percentage and then reversed to the dealers on the grounds that the motorbikes ordered would not be ready. If this is true it would cause even more of a financial shortfall and sounds like very dubious business practice at very least.
So it becomes easy to understand that the 15 million euro’s put up by KTM is only a drop in the ocean and that MV’s liabilities and risks are far greater than both the 25.1% of the shares it initially agreed and the increased 32% hypothetically reached since during initial due diligence consultations. Doing the maths, these debts and risks are well beyond the value of the company.
The paradox
Customers want MV Agusta’s but the bikes just don’t exist. What will be sold in the UK, US, Mexico and Canada sales network that KTM will take over in 2023, nobody really knows for certain.
The Risks!
Well, the people added to the board by KTM are there with the idea of replacing Sardarov as soon as the Austrians gain control of the company. This is likely to be well before his contract expires.
The first of these people is Luca Martin, currently CEO of KTM Asia. He is the person set to lead MV Agusta once a majority stake has been acquired. The second figure is Verena Schneglberger-Grossmann, currently VP of Legal services at Pierer Mobility. She is also the head of KTM’s Legal department, and it is her job to find every cobweb in every nook and cranny of the MV Agusta company. Every time she finds a gap in the finances, Pierer Mobility will ask to raise the controlling percentage of KTM without adding any more money.
In the meantime, MV Agusta will no longer be a real manufacturing company. They will focus purely on production. Purchasing, Sales, administration, distribution and everything else will be controlled by Pierer Mobility. They will supply the parts to MV and buy the completed products for distribution in their own dealer network.
Which brings us to the latest announcements and contradictions which was how this video started.
Internal Conflicts
There is already conflict on the board as the latest statements show. Both the statements from MV Agusta and KTM have been very carefully drafted and cover some very interesting specifics. There is a also a comment from QJ Motors group to confuse things further.
Sardarov’s Statement
In a statement to MCN Sardarov said “We have officially terminated all of our dealers” “In future we want all of our dealers to measure up to the flagship store in Milan.” “Plans now being rolled out will see MV’s serviced at KTM dealerships with spare parts supplied by Pierer Mobility” but he was very vague and a little evasive when it came to the details. Remember the comment “MV’s will be serviced at KTM dealers”
Sardarov continued “In Europe and the US, our first focus is to get our bikes serviced at KTM dealerships”. Here note the term “first focus “. Sardarov was quick to state that “MV production would remain in Italy, with no shared platforms”. Where that leaves the 5.5 Lucky Explorer which is a restyled and rebadged Benelli that uses a Chinese built engine and chassis is anyone’s guess at the minute.
MV Agusta signed a long-term strategic partnership agreement with Chinese giant, Quianjiang Motor Company (QJ Motor) who are the parent company of Benelli Motorcycles. Qianjiang Motors general manager, Dongshao Guo said “MV Agusta is a world-famous brand with a long history, and also an old friend and close partner of Qianjiang Motorcycle. This cooperation is not only a strong combination of the two sides’ business, but also a further recognition of the brands and ideas of each other,”.
Less Than Honest?
So, we start with some confusing or less than honest statements from Mr Sardorov. You can’t say “MV production would remain in Italy, with no shared platforms” when you have already signed the forms to utilise a platform made in China by a partner who considers the company an “Old friend”.
Although retaining their current factory, Sardarov says they will be “taking advantage of Pierer’s ability to ramp up parts production”, Adding: “One of the key points of our partnership is to optimise the supply network and to make it more efficient and more reliable, here KTM have great experience.”
This intimates that parts supply controlled by Piere Mobility will take advantage of the cheaper production costs and scalability of CF Moto as parts supplier. Their European factories do not have the extra capacity to produce MV Agusta parts, they don’t even make most of their own parts in Europe now..
Sardarov also said that some of KTM’s other brands such as WP Suspension and Pankl would be considered for use in future models.
KTM released a statement shortly after the Sardarov statement. It contained some interesting contradictions.
KTM Statement
“KTM Sportmotorcycle UK Ltd is pleased to clarify that they will be taking full responsibility of the MV Agusta brand on 1st April 2023”. This fits perfectly with the announcement from MV that all existing dealerships will be terminated.
“The strength of the MV Agusta brand, coupled with the assurance of the new corporate structure and procurement arrangements, means that we’re confident that we will find ambitious dealers willing to move the MV Agusta brand forward with us.” The term “we will find ambitious dealers to move the brand forward” does not sound like they intend to use KTM dealerships at all, and this contradiction continues.
“Contrary to how it has been reported, there is no plan to enable MV Agusta customers to service or buy parts from KTM dealers. The platforms of each brand are completely different and it wouldn’t be practicable, nor fair to the MV Agusta network, for authorized KTM dealers to service MV Agusta motorcycles.”
This totally contradicts what the CEO of MV, Timur Sardarov, said in his statement. KTM either are or aren’t going to supply parts and servicing for MV. If their dealers aren’t, then who are the dealers that will be taking the brand forward? And why does Mr Sardarov think KTM dealers will be the network being used?
The Present
So where does all this leave the MV Agusta brand in reality?
With production far from running smoothly, no dealer network and a partner that seems to see the future quite differently, there really is no telling.
A new F4 model is, in the words of Sardarov, still “at least 5 years away”. This leaves the racing pedigree of the brand in limbo as the only remaining MV Agusta race team is only MV Agusta by name, running a Triumph engine in a Forward Racing chassis.
Yes there are the new Adventure bikes if they are ever produced and reach the dealerships but that is not enough to keep the company afloat, especially when that sector is so competitive right now.
Being honest I don’t see a future that reflects the great name of MV Agusta very well. Whether power and control lies in the hands of a Russian Oligarch who is a self proclaimed “Car guy really” or a corporate giant who is focussed on dominating the European market in the way VW Audi dominate the 4 wheel market, I see little evidence that the company, led by engineering and design excellence will continue on as the company they once were.
The Future
Moving spares logistics and distribution to Pierer Mobility is something that is also happening with Pierer’s Chinese partner Cf Moto. With control over KTM, CF Moto and MV Agusta parts distribution and sales it would only make financial sense for Pierer to have all of the parts manufactured in China by CF Moto. There would also be multiple financial incentives to manufacture as many of the motorcycles in sub assemblies at the factory in China and then just do the final assembly in Italy for MV Agusta and Austria for KTM.
Is this the future we will get?
What I do see at the very least is a future with a lot of infighting and battles for control over what was once the greatest motorcycle brand in the world.
All a bit sad really. I hope I am wrong.
MV Agusta have even set the lawyers onto YouTube influencers that have put the news out, with orders to remove anything that mentions MV Agusta from their channel. You can check that out in the link below in the description but it is in Italian https://www.youtube.com/watch?v=fCbrawGhNZc .
Racing Heritage
On a slightly different note, despite assurances, the MV Agusta Moto 2 team is to be taken from its current organisers and may be scrapped all together.
So what has happened to MV Agusta’s sporting heritage?
Is it being scrapped so that KTM have even less competition?
The story does keep evolving so as I get any more news I will keep you posted.
The latest development seems to be that a seperate company, MV Agusta GmbH has been incorporated.
Why?
Perhaps the existing company incorporated in Spain is to be liquidated?
Is that the plan?
Liquidate the company, reneging on debts, and then use the brand name for a seperate newly formed company?
When you have a convicted fraudster, a Russian Oligarch, and a bunch of multinational business and legal execs in charge, nothing would surprise me.
Let us hope there is some good news soon.
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