Hero MotoCorp buys 49.2 percent stake in US-based Erik Buell

Indian two-wheeler major Hero MotoCorp has bought 49.2 percent equity in US-based superbike company Erik Buell Racing (EBR) for $25 million, officials said here Monday.

The first tranche of $15 million was invested by Hero MotoCorp Ltd. (HMCL) early Saturday morning (Indian time) while the remaining amount of $10 million will be invested in the next nine months.

The remaining share of 50.8 percent would be held by Erik Buell and his wife.

According to HMCL managing director and chief executive officer Pawan Munjal, the partnership is part of HMCL's strategy to globalise the Hero brand and the two brands will together promote and sell EBR as well as Hero Hero bikes in African, European and North American markets.

"As we go on spreading our footprint in new international markets, we will look at having extended centres of our own research and design at multiple locations around the world," said Munjal.

"This is for the first time that Hero has gone out to buy a company on equity," he added.

Acknowledging the fact that markets like America are dominated by bikes whose engines are much bigger than what Hero offers on their bikes, Munjal said he believed that "smaller engines can be sold in America".

Meanwhile, there will be no organisational changes at EBR and Erik Buell will continue to be its chairman and CEO. However, HMCL will have two directors and one observer on the EBR board.

HMCL and EBR formed an alliance last year, under which the Indian two-wheeler marque receives support in terms of latest technology and design to develop future models.

Munjal further said that the company has increased its export target to 350,000 units in 2013-14 from around 200,000 units in 2012-13. The company is aiming to reach the objective of 10 percent of its total volumes from international business in the next four to five years.

HMCL had, in May, launched products in Guatemala, El Salvador and Honduras.

It currently exports to several countries, including Colombia, Sri Lanka, Bangladesh and Nepal.