ANOTHER INDUSTRY SHOCKER! YAMAHA BUYS 34% OF KAYABA AND MOVES IT TO INDIA
Yamaha has acquired 33.4 per cent stake in Kayaba (KYB). According to industry sources this transaction involves moving the majority of the KYB’s operations to India. The India move will lower costs for Kayaba and also lower the costs for Yamaha’s OEM suspension purchases. As part of the collaborative Yamaha/KYB operation, KYB’s goal is to use its company in India to manufacture and sell products that are cost competitive. In July 2013, KYB plans to have its company in India issue stock for sale to Yamaha Motor. This sale will make the subsidiary a joint venture that will be 66.6% owned by KYB and 33.4% owned by Yamaha Motor Corporation. The motorcycle operations of the automotive components business of KYB will be divested on July 1, 2013 (tentative) to form a new company, and then part of the shares of this company will be sold to Yamaha Motor.
In reality, this deal will most likely have very little effect on the production of high-end motocross or sport bike suspension components for the near future. This is not the first time that Yamaha has bought an interest in a suspension company. Yamaha owned a majority stake in Swedish suspension builder Ohlins, but sold 95 percent of the company back in 2007. The Ohlins deal was about R&D, the KYB deal is about economy of scale. Additionally, Yamaha was working on a plan to build its own motocross suspension components a few years ago.
Yamaha’s press release states that: “This initiative aims to further strengthen product competitiveness as well as improve profitability by combining the strengths of each company. Suspension components produced through this joint venture will be the company’s largest platform components in terms of procurement value, and among the most important components that contribute to the nature of the products. This initiative which allows for the development and production of main components at the joint venture company will not only increase product competitiveness and reduce costs, but will also contribute to improvement in innovation, technology, and brand image.”
Kayaba’s new suspension manufacturing plant will be built next to Yamaha’s new motorcycle manufacturing plant in Chennai, India.