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Volkswagen AG's Audi will buy Italian motorcycle maker Ducati

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Volkswagen AG’s Audi announced Wednesday that it will purchase luxury Italian motorcycle maker Ducati. The German auto manufacturer will pay 860 million Euros, or $1.1 billion, for the Bologna-based company, which in recent years had been courted by Mercedes-Benz and India’s largest motorcycle maker, Hero MotoCorp.

“Ducati is known worldwide as a premium brand among motorcycle manufacturers and has a long tradition of building sporty motorcycles,” said Rupert Stadler, chairman of the board of management of Audi AG, in a statement released Wednesday. “It has great expertise in high-performance engines and lightweight construction, and is one of the world’s most profitable motorcycle manufacturers. That makes Ducati an excellent fit for Audi.”

Ducati sold 42,000 motorcycles globally last year and employs 1,100 people. It has manufacturing operations in Bologna and in Thailand, where it’s positioned for strong motorcycles sales growth, particularly in Asia, according to the Audi statement. In the U.S., Ducati has defied an agonizing three-year motorcycle sales slump. U.S. sales of Ducatis were up 43% in 2011 versus 2010, compared with a 1.8 percent increase in new motorcycle sales for the industry.

PHOTOS: A look at Ducati, the Italian motorcyle maker

Volkswagen sold 8.36 million vehicles worldwide in 2011.

“Audi is scrambling for small engine technology,” said Jim Martindale, partner with Navint, a management consulting firm in Chicago. “In the automotive space, so much focus is going to small displacement motors, high fuel efficiency and squeezing a lot of horsepower out of very limited displacement.”

Audi’s interest in Ducati dates back to April 2008 when Volkswagen Chairman Ferdinand Piech said he wanted to buy the brand. Ducati was subsequently sold to Investindustrial, a leading European investment group based in Milan, Italy.

The Ducati purchase is merely the latest jewel in Audi’s premium-motorsports crown. The German automaker also owns Bugatti and Lamborghini, the latter of which hired former Ducati North America Chief Executive Michael Lock in March.

“Ducati is a great brand name that probably could use a lot more cash to grow it out of the motorcycle niche,” said Bill Nation, owner of the U.S.’ second-largest Ducati dealership, Pro Italia, in Glendale, Calif. Nation speculates that Ducati might benefit from Audi’s investments in expensive alternative drivetrain technology as well as manufacturing expertise.

Ducati seems to have been grooming itself for sale over the last couple of years, introducing several new and innovative models, including its first hot rod, the Diavel, which went on sale last year, and the 1199 Panigale that will be available at dealers this weekend. The Panigale superbike boasts the highest power-to-weight and torque-to-weight ratios of any production motorcycle on the planet.

Ducati was founded by Adriano and Marcello Ducati in Bologna in 1926. It was originally a maker of radio parts. It began manufacturing motorcycles in 1949 and has since become synonymous with premium high-performance sport bikes.

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