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Daimler buys into Agusta as motorbike and car tech converge

Daimler AG will buy 25 per cent of Italian motorcycle maker MV Agusta - the latest sign that motorbike and car technologies are converging, driven by a push to lower emissions and improve safety.

Daimler said on Friday it would buy the stake via its Mercedes-AMG performance cars unit and take a seat on the board at Agusta - a legendary name in the sport of motorcycling, having won at least 75 world championship rider and constructor titles.

It did not disclose the financial terms and said it was part of a broader cooperation deal between high-end brands Mercedes and Agusta which would mainly focus on marketing and sales.

Buying into Agusta gives Stuttgart-based Daimler access to high-performance, lightweight technology, including three-cylinder engines developed for Italian superbikes.

Daimler says Agusta's motorbike engines are unlikely to be used in its Mercedes passenger cars any time soon - however tougher anti-pollution rules have increased interest among carmakers in the lightweight construction technology and compact engines, which could be used as "range extender" add-ons to complement electric engines in hybrid vehicles.

The Daimler deal follows moves by rival automakers to add superbike technology to high-end German sportscars, known for their solid build quality but also their thirst for fuel in an era of tighter anti-pollution rules.

In 2012 Volkswagen (VOWG_p.DE: Quote, Profile, Research, Stock Buzz), which owns the Lamborghini, Bentley and Bugatti brands, bought Italian motorcycle maker Ducati for 860 million euros. At the Paris Motor Show this year, VW unveiled the high-tech XL Sport car equipped with a 200 horsepower two-cylinder Ducati engine.

"Final frontier"

Famed race car engineer Gordon Murray - who put a motorbike engine in a sportscar known as the Rocket in 1992 and also designed the three-seater McLaren F1 - said motorcycle engines could be adapted to work in certain cars.

"Bike engines are ahead of cars in terms of their weight. And for the car industry shedding weight is the final frontier."

Motorcyle makers are also ahead of the car industry in terms of the way they use plastics, rather than metal for structural parts, Murray told Reuters. "With bike makers suffering from lower production volumes it makes sense to work with a large car maker which has resources," he said.

Motorbike makers can also benefit from safety technology used in cars. Anti-lock braking systems (ABS), which have been standard in all new cars for decades, will become compulsory for motorbikes in the European Union in 2016.

KTM, which last year acquired the Husqvarna brand from BMW, even launched its own sportscar, the X-Bow, in 2008.

Daimler's push to expand its motorcycle know-how follows a move by regulators to punish makers of large heavy cars with powerful engines.

In February, the European Parliament voted to limit emissions of carbon dioxide to 95 grams per kilometer (g/km) as an average across all new cars sold in the European Union from 2020, up from an existing limit of 130 grams.

As part of an aggressive push to lower emissions, Daimler earlier this month announced it would introduce 10 new hybrid vehicles by 2017.

Rival BMW (BMWG.DE: Quote, Profile, Research, Stock Buzz) already uses a three-cylinder engine to power the i8 hybrid, currently one of the most high-profile sportscar models in the Bavarian automaker's range. BMW also makes superbikes.

Rebirth

MV Agusta largely disappeared in the 1970s and its rebirth in 1992 under motorcycle entrepreneur Claudio Castiglioni and renowned designer Massimo Tamburini created the F4 superbike, one of which belonged to King Juan Carlos of Spain and was loaned out to the Guggenheim Museum for an exhibit.

In the past 10 years, however, the brand has repeatedly come under financial duress and gone through several owners that included Harley-Davidson (HOG.N: Quote, Profile, Research, Stock Buzz) and Malaysian state-owned carmaker Proton. It was bought back in 2010 by Castiglioni shortly before he died, and is now run by his son.

The motorcycle maker, with 260 employees at its headquarters on the shore of Lago di Varese in northern Italy, has a product portfolio of three- and four-cylinder models ranging from 675 to 1100 cubic centimeters engine displacement.

Tobias Moers, chief executive of Mercedes-AMG, said: "In MV Agusta, we have found the perfect two-wheel partner for Mercedes-AMG. The partnership provides us with an entry into a world of additional high-performance enthusiasts."

Giovanni Castiglioni, president and CEO of MV Agusta, said: "Mercedes-AMG will help MV Agusta to further expand globally and to accelerate our growth."

Earlier this month, sources told Reuters that Daimler was in talks with MV Agusta about taking a stake.

The partnership is subject to the approval of the relevant authorities, expected to be granted in late November.