Hero MotoCorp Ltd. India’s largest motorcycle and scooter maker by sales, announced today that it has become the second-largest stakeholder in EBR (Eric Buell racing) a U.S.-based motorcycle company and said it would enter the African market shortly and establish assembly plants in Colombia, Kenya and Nigeria to expand its footprint overseas.
Hero MotoCorp bought a 49.2% stake in Erik Buell Racing LLC, a maker of high-end street motorcycles, for $25 million. The remaining stake is held by Erik Buell, the founding chairman and chief executive of the East Troy, Wisconsin-based company.
Erik Buell is a former engineer of Harley-Davidson Inc. He started his own company– Buell Motorcycle Co., which in 1983 became a unit of Harley-Davidson. In 2009, Harley ended the Buell line to focus on its own brand of motorcycles. Later that year, Mr. Buell launched Erik Buell Racing.
Erik Buell Racing currently sells a 1,190-cubic-centimeter motorcycle under the EBR brand and plans to develop more models. In comparison, motorcycles made by Hero MotoCorp have 100cc-223cc engine capacities, and the company sold 5.91 million scooters and motorcycles in the fiscal year ended March 31, 2013.
“This stake purchase is the first step in the globalization of Hero MotoCorp on the road to actually globalize the brand Hero,” said Pawan Munjal, managing director and chief executive of Hero MotoCorp. He said the company will pay for the transaction from its internal accruals.
The initial amount of $15 million has been paid already, while the remainder will be paid in the next nine months, he said.
Mr. Munjal said the partnership with Erik Buell would allow Hero MotoCorp not only to develop new products, but also to sell its motorcycles in the U.S. and Europe.
Erik Buell sold just 65 motorcycles in 2012, but the aim is to sell about 20,000 motorcycles in 2017.