America's iconic motorcycle is covering new grounds as it substantially increases it presence beyond its homeland to the continent of Europe. Harley-Davidson yesterday announced the signing of a definitive agreement to purchase the Italian motorcycle maker MV Agusta Group (MVAG).

Under the agreement, Harley-Davidson will acquire 100 per cent of MV Agusta Group shares for total consideration of approximately €70 million ($109 million), which includes the satisfaction of existing bank debt for approximately €45 million ($70 million).

In addition, the agreement provides for a contingent payment to current chairman Claudio Castiglioni in 2016, if certain financial targets are met. MV Agusta Group is privately held, with the Castiglioni family owning 95 per cent of MVAG shares.

The acquisition is expected to close in the next few weeks, subject to regulatory approvals. Harley-Davidson intends to fund the transaction primarily through euro-denominated debt.

According to Harley-Davidson CEO Jim Ziemer, the acquisition is intended primarily to expand Harley-Davidson's presence and footprint in Europe, complementing the Harley-Davidson and Buell motorcycle families. Retail sales of Harley-Davidson motorcycles have grown at a double-digit rate in Europe in each of the last three years, as the Company has increased its strategic focus on global markets.

"The acquisition of MV Agusta Group will enhance Harley-Davidson Inc.'s position as a global leader in fulfilling customer dreams and providing extraordinary customer experiences. We look forward to a long relationship with the MV Agusta and Cagiva families of customers and employees," said Ziemer.

Harley-Davidson, Inc. plans to continue to operate MV Agusta Group from its headquarters based in Varese, Italy. Following closing, the first priority will be to appoint a leadership team to include a new managing director and to resume the manufacture of current models. The current Agusta chairman will continue in his role while design chief Massimo Tamburini will still be heading the company's renowned sport-bike design studio.

"Motorcycles are the heart, soul and passion of Harley-Davidson, Buell and MV Agusta," said Ziemer. "Both have great products and close connections with incredibly devoted customers. The MV Agusta and Cagiva brands are well-known and highly regarded in Europe. They are synonymous with beautiful, premium, Italian performance motorcycles."

However, investors did not share his confidence. On Friday, as broad indexes continued their fall, shares of Harley-Davidson fell 20 cents to $33.50 in afternoon trading after touching a new 52-week low of $32.33 earlier in the day. The stock has traded as high as $62.99 in the past 52 weeks.

"We take enormous pride in MV Agusta and Cagiva motorcycles," said Castiglioni. "Our riders seek an uncompromising experience in premium performance motorcycles. And with Harley-Davidson's deep understanding of the emotional as well as the business side of motorcycling, I have great confidence that our motorcycles will excite customers for generations to come."

Harley-Davidson, Inc. is the parent company for the group of companies doing business as Harley-Davidson Motor Company (HDMC), Buell Motorcycle Company (Buell) and Harley-Davidson Financial Services (HDFS).

Harley-Davidson Motor Company produces heavyweight motorcycles and offers a line of motorcycle parts, accessories, general merchandise and related services. HDMC manufactures five families of motorcycles: Touring, Dyna, Softail, Sportster and VRSC.

Buell produces premium sport performance motorcycles and offers a line of motorcycle parts, accessories, and apparel. HDFS provides wholesale and retail financing and insurance programs primarily to Harley-Davidson and Buell dealers and customers.

Harley-Davidson shipped 330,619 bikes last year and has a network of about 1,300 dealers. The company employs around 10,000 people and had annual revenue of $8.8 billion last year.

MV Agusta Group has two families of motorcycles: a line of exclusive, premium, high-performance sport motorcycles sold under the MV Agusta brand; and a line of lightweight motorcycles sold under the Cagiva brand.

The company sells its products through about 500 dealers worldwide, the vast majority of them in Europe. In 2007, MVAG shipped 5,819 motorcycles. During 2008 MVAG has significantly slowed production due to financial difficulties.

MV Agusta's bikes are considered high-end and typically sell in a range of about $14,495 to $24,995 in the US. Some sell for even more, with special editions fetching $120,000. In the upcoming Batman movie "The Dark Knight," Batman's alter ego Bruce Wayne will ride a new MV Agusta F4 superbike.

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