I dare you to find any sane financial type who thinks we are currently not experiencing some type of bubble.  Everything in the financial spectrum is expensive – from the stock market, to real estate, to venture, etc. The only thing that is cheap is oil and gas but no one is glorifying that third rail of an investment asset class.  The bulls (believers in more room for price growth) are running rampant and the bears (believers that prices will fall soon) are peacefully hibernating waiting for financial campers to leave food out.  There will be blood in the streets soon but for now, life goes on – deals are being done left and right with amnesia-infused gusto as though the 2008 financial crisis never happened.  During times like this, it is prudent to remember Warren Buffet’s timeless caution: “be greedy when others are fearful and fearful when others are greedy”.

With the extreme price hysteria as a backdrop, the movers and shakers have their eyes squarely on still getting shit done.  Bloomberg News and Reuters are reporting that Italian motorcycle brand Ducati is being sold by Germany’s Volkswagen whose Audi division controls the iconic motorbike maker.  The potential sale of Ducati came about because Volkswagen is actively trying to shed noncore assets to slim down the company. Volkswagen is also trying to move beyond a diesel emissions-cheating scandal that has left it facing billions of dollars in fines/settlements.

Based in the Borgo Panigale district of the northern Italian city of Bologna, Ducati was launched in 1926 as a maker of vacuum tubes and radio components and its factory remained open during World War Two, despite several bombings.  It has since grown and evolved to become a highly respected brand that exudes quality and speed.

Ducati, has received several tentative bids with the famous Italian Benetton family showing a lot of interest. The family’s investment vehicle Edizione Holding is valuing Ducati at about $1.2 billion – a muscular price tag for sure at more than 10 times Ducati’s annual profitability.  However, some internal sources have leaked that Volswagen is seeking more like €1.5 billion for Ducati.  Other interested parties for the Ducati asset include Bain Capital, CVC Capital, Investindustrial (a previous owner of Ducati until 2012), PAI, Advent, Eicher Motors and Bajaj Auto.  Reports surfaced earlier in the year that Harley Davidson was also a contender but Ducati’s price tag proved to be too much of a heavy lift for the storied American motorcycle maker.

This will be a fun one to watch because as the bulls get fat from easy grazing, there is some certainty that a banquet is near and the guests of honor will undoubtedly be the very patient bears.

 

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