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Hero MotoCorp to buy assets of bankrupt US firm

Will acquire certain tangible and intangible assets of Erik Buell Racing for Rs 18 cr

Swaraj Baggonkar Mumbai
Last Updated : Jul 29 2015 | 12:18 AM IST
Hero MotoCorp, India’s largest two-wheeler manufacturer, will acquire certain tangible and intangible assets of its  US-based bankrupt partner Erik Buell Racing (EBR) for $2.8 million (Rs 18 crore).

Hero MotoCorp’s US subsidiaries HMCL NA and HMCL Americas have signed a settlement in this regard with the receiver appointed by the Circuit Court, Wisconsin, US.

The deal is a positive for Munjal family-promoted Hero MotoCorp as nearly half a dozen projects of the Indian company have faced uncertainty following the closure of EBR’s operations in April when the US company filed for bankruptcy protection.

The deal would help Hero MotoCorp’s in-house research and development teams to accelerate development of certain consulting projects, including the projects EBR was executing for the company, Hero said in a statement. On Monday, there were news reports about Hero’s further interest in EBR to which Hero’s stock reacted negatively.  

In 2013, the Delhi-based company had picked up a 49.2 per cent stake in EBR for $25 million (Rs 150 crore).

Over the past two days, Hero MotoCorp has dropped 7.55 per cent on the BSE, wiping out Rs 4,217 crore market cap.

In 2013, the Delhi-based company had picked up a 49.2 per cent stake in EBR for $25 million (Rs 150 crore). The two companies had been working together for a year on research and development prior to the stake buy.

An email sent to Hero MotoCorp asking if the company's stake in EBR would remain at the current level remained unanswered.

Through EBR, besides developing products for the domestic market including electric- and diesel-powered two-wheelers, Hero had also been gunning a foray into the US market, something no Indian manufacturer has done with the exception of Eicher Motors-owned Royal Enfield.

Some of the next-generation products were dependent on EBR's input to move ahead. EBR's knowledge of developing high-speed performance bikes was the pivot for Hero's interest in the company.

Hero was keen on tapping the EBR’s technology to counter the increasing shift of rivals Bajaj Auto and TVS Motor towards high-end bikes. While Bajaj tied up with Austria’s KTM and successfully launched products above 200cc,

TVS will follow suit later this year, riding on its partnership with Germany's BMW.

The notice of motion on the settlement agreement will be filed in the Circuit Court in the next few days.

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First Published: Jul 29 2015 | 12:18 AM IST

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