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H-D leveraged buyout in progress?

General announcements, news or ideas concerning people, places, or events coming up. No technical, politics, or complaints. Try to keep it short.

Moderators: Curt!, Pa

Post Thu Mar 18, 2010 12:18 pm

Posts: 2684
Location: Los Angeles, CA
Harley-Davidson the Subject of Buyout Rumors
Reuters reported Tuesday that Harley-Davidson might be the target of a leveraged buyout, talk of which sent the company's stock up nearly seven percent to $28.35. By Wednesday, the stock fell to $28.18 while its trading volume was down about 75 percent.

The supposed suitor for H-D is global private equity firm Kohlberg Kravis Roberts (KKR). So far, the buyout talk is unsubstantiated; spokesmen from both KKR and H-D declined to comment on what they called "market speculation."

Financial industry insiders mostly downplayed the buyout "rumors," Reuters reported.

"There's been a rumor a day among a lot of value names for the last week," says Peter Zuger, a mutual fund advisor for Touchstone Mid Cap Value Fund, which owns Harley shares. "I don't know which ones are real and which ones aren't." Due to H-D's cost cutting measures and its current depressed state, it makes sense that a private equity buyer like KKR is interested in the motor company, he says. Zuger's company took advantage of the speculation to pare its H-D holdings.

A leveraged buyout is also known as a "hostile takeover," where the buyer mostly uses debt to purchase another company. Assets of the purchased company can be used as collateral to secure funding.

In other H-D news, the company recently donated $1.4 million in fixtures, tables, flooring, lighting and wall components from its shuttered Buell factory to the Milwaukee Institute of Art & Design, according to The Business Journal of Milwaukee.

Post Fri Mar 19, 2010 4:00 pm

Posts: 903
Location: Hill City, Ks. USA

It seems this rumor has legs. It just won't go away. I cannot believe the HD board would entertain a buyout from KKR. These guys are famous for buying large companies, then laying off most of the workforce and selling off the assets to make a profit. There is a good chance that Harley Davidson would cease to exist after these guys get through with it. HDI's balance sheet looks like hell, and times are going to be tough for quite a few years, but committing corporate suicide is not a viable option IMO. I would hope that the motor company has a few decades left of turning out what is still one of the best motorcycles on this planet.
Curt!

Post Sat Mar 20, 2010 12:15 am

Posts: 1634
wouldn't be the first time, would it. I was reading "Well Made In America" a while ago, with its account of the various comings and goings involving companies like Bangor Punta and Citicorp.

Greed is good, greed is right ... it's the American Way
Shoot, a man could have a good weekend in Dallas with all that stuff...

Post Sat Mar 20, 2010 7:15 am
Pa Site Admin

Posts: 5673
Location: Ohio USA

45Brit wrote:

Greed is good, greed is right ... it's the American Way


No different in the USA than in any other nation of the world. The working class are far from greedy. The elect few are those you speak of. The more they get...the more they want..

Post Sat Mar 20, 2010 9:36 am

Posts: 1634
what have elections got to do with it? I was thinking of Gordon Gecko... You don't see BMW or Volkwagen having these problems.
Shoot, a man could have a good weekend in Dallas with all that stuff...

Post Sat Mar 20, 2010 10:38 am
Pa Site Admin

Posts: 5673
Location: Ohio USA

I wasn't speaking elections. I thought you were refering to people in general. My boo boo.

Post Sat Mar 20, 2010 5:04 pm

Posts: 387
Pa,
Minor semantic error. You should have said SELECT few, not elect.
Robbie

Post Sat Mar 20, 2010 9:24 pm
Pa Site Admin

Posts: 5673
Location: Ohio USA

Or elite few Robbie. :wink:

Post Tue Mar 23, 2010 6:58 pm

Posts: 2684
Location: Los Angeles, CA
Curt! wrote:
It seems this rumor has legs. It just won't go away. I cannot believe the HD board would entertain a buyout from KKR. These guys are famous for buying large companies, then laying off most of the workforce and selling off the assets to make a profit. There is a good chance that Harley Davidson would cease to exist after these guys get through with it. HDI's balance sheet looks like hell, and times are going to be tough for quite a few years, but committing corporate suicide is not a viable option IMO. I would hope that the motor company has a few decades left of turning out what is still one of the best motorcycles on this planet.



The board can do nothing about a leveraged buyout. It is a hostle takeover.

Post Wed Mar 24, 2010 12:58 am

Posts: 1634
it's not strictly true that there is nothing the board can do in the face of a hostile takeover

the short-term defence against a hostile takeover, is to increase profitabilty and drive up your share price to a point where existing share-holders retain rather than sell.

the long-term defence is to buy back shares so that the scope for one is reduced, or eliminated. This has the additional benefit of reducing long-term pressure for dividends, and at least in the UK ( I'm not familiar with US corporate tax law ) this is a very tax-efficient use of profits.

how much scope the board of any given company has for either or both of these tactics, at any given time, is a different question. The logic of the situation dictates that a corporate raider will choose a target which is not felt to be in a position to defend itself
Shoot, a man could have a good weekend in Dallas with all that stuff...

Post Fri Apr 23, 2010 5:09 pm

Posts: 202
Location: Middle England UK
Chris Haynes wrote:

The board can do nothing about a leveraged buyout. It is a hostle takeover.



Chapter Eleven.

Post Sat Apr 24, 2010 12:48 am

Posts: 1634
it doesn't avoid the basic question though.

H-D has been selling very expensive products of a highly specialised type, for a very long time now. Its reputation for engineering quality and standard of finish has plummetted - look at the threads on boards like HDRCGB regarding paint flaking off in jet washers, chrome failing over a single winter, wheel rims collapsing and so forth. Buell has closed, which suggests that H-D is not competitive in the top-end sports-bike market. The Japanese are getting better and better at making fake panheads and electragildes, and bikes like the TransAlp are what the Sportster should have been thirty years ago; I bought one second-hand for less than a third of what I would have paid for a Sportster, and it was a great run-about; a 650cc v-twin with light handling and plenty of punch. The V-Rod is, well, the V-Rod and appears to sell in small numbers to people who want one.

I'd say it's a very good question whether H-D can survive the current down-turn with their existing product range.
Shoot, a man could have a good weekend in Dallas with all that stuff...

Post Sat Apr 24, 2010 10:58 pm

Posts: 975
Location: Markt Einersheim, Germany

I think that Harley's need for greed is going to be their downfall.

I will not buy another new Harley.

George

Post Tue May 04, 2010 8:25 am

Posts: 1634
Shoot, a man could have a good weekend in Dallas with all that stuff...


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