Hero MotoCorp Acquires Consulting Assets From Erik Buell Racing
After all the speculation surrounding Hero MotoCorp’s reported buy-out of Erik Buell Racing, the two companies have finally announced that a deal has in fact been agreed upon. The only caveat is that it’s not the full-blown acquisition that was initially reported.
Hero MotoCorp, through its wholly-owned subsidiaries HMCL NA Inc. and HMCL Americas Inc., announced in a filing with the Bombay Stock Exchange that it had entered into a settlement agreement with Erik Buell Racing to purchase “certain tangible and intangible assets of EBR Entities” for a sum of $2.8 million.
So, what does that mean? The most important thing to remember is that Hero isn’t buying EBR outright. Instead, it will only buy a certain part of EBR’s overall business, leaving other aspects of EBR’s business still up for grabs through its Chapter 128 receivership.
Part of the acquisition allows Hero to retain research and development assets that EBR has been developing for the company. This particular wrinkle in the two company’s business dynamics came about when EBR signed a consulting deal with Hero to provide R&D services for the Indian motorcycle brand. As part of this most recent acquisition, Hero gets to keep all the technology EBR was developing on its behalf. That includes tech for the Hero HX250R, which would probably prove useful for Hero in the long run.
As expected, the deal between Hero and EBR has yet to be consummated because it’s still subject to approval by the Circuit Court in Wisconsin and the board of directors of Hero MotoCorp. The good news is that neither side expects to find any resistance so there’s optimism from both companies that the transaction will push through sooner than later
Continue reading to read more about Hero MotoCorp’s acquisition of consulting assets from EBR.
Why it matters
It’s not quite the sale Erik Buell Racing is hoping for, but when you have nothing going for you, the age-old maxim of “taking anything you can get, any way you can get it” applies in this case. It’s a good start for EBR to get some money flowing in the right direction.
Sometimes, trying to get a stagnant well running again is the most important part of getting it up to full swing. Who knows, maybe this transaction could jump-start EBR’s fortunes too?
As for Hero MotoCorp, acquiring the technology EBR has already developed for the company ensures that Hero can continue to use this tech to further boost its own product portfolio. The acquisition of the tech behind the HX250R is particularly important because it essentially stays in-house for Hero.
Having that fall in the hands of another company could have negative effects on the unique identity of the HX250R. Hero likely had that thinking when it made that decision and you can’t blame it for stepping up to buy it before another company did.
Overall, this is a good deal for both Hero and EBR. Each company gets what it wants, even though in EBR’s case, it’s not the entire business acquisition it was hoping for. The American brand still has to go through its Chapter 128 receivership to sell off its other assets and even then, there’s no outright guarantee that it could find a buyer that is willing to take on the entire business without getting its hands on the technology EBR has already developed for Hero.
Again, it’s a good start for EBT as it tries to rise up from the ashes. Where it goes from here is still up for debate, but for what it’s worth, that $2.8 million the company is going to get from Hero MotoCorp could go a long way in stabilizing its financial struggles.