Japanese automaker Honda Motor Co. has recently denied rumors alleging that it will buy Harley-Davidson Inc., which caused the US motorcycle maker's share to rise in New York last Friday.
But just in case Honda and Harley do combine, their union would be able to control 65 percent of the US motorcycle market while its next leading competitor Yamaha will be left with only 16 percent. Such type of stronghold on the motorcycle market would definitely not please the Federal Trade Commission.
Honda through its spokeswoman Yoshido has extended their stand on the issue. According to Honda spokeswoman Makiko Yoshida in Tokyo last Monday, "There's absolutely no truth to it."
Amidst doubts from analyst and market participants, Harley-Davidson shares and options were able to increase with 58,535 options last Friday which is fourteen times more than the daily average that is basing from the figures gathered by market research firm Track Data.
RBC Capital Market Analyst, Edward Aaron in an interview with Forbes.com last Friday said, "I'd be surprised if there was a Honda and Harley-Davidson combination, basically for regulatory and cultural reasons." He also added, "Harley is an iconic, American brand. I don't think it would be a great fit if they were under the ownership of a larger Japanese corporation."
Aaron further stated that it was unlikely that Harley would become the target of a buyout. He said, "Although an LBO is more plausible than a merger with Honda, the math behind such a transaction is not highly compelling." And besides Harley is already a well operated business with a high margin profile and it’s not a good business sense for an LBO investor to shell out a significant premium and be able to generate a fitting return.
Harley's share gained as much as 6.4 percent before closing last Friday's session by $2.43 or about 4 percent at $62.55 on the New York Stock Exchange. On the other hand, the shares of Honda, the world's biggest motorcycle maker and producer of high quality Honda exhaust system have gained very little increase in Tokyo with only 0.5 percent last Monday at 4,420 yen.
