The LML-Piaggio Break-Up

The company had gained market share and its profits were also improving steadily. Also, in 1997, two months before the death of Giovanni, the partners had announced their decision to enter the motorcycle segment. Moreover, the fact that LML's stylish scooters were more stylish when compared to Bajaj's stodgy models, was attributed to LML's partnership with Piaggio. Above all, as Piaggio was also LML's technology partner, the fight could put on hold Singhania's plans of launching the Gilera range of motorcycles through LML. However, Singhania felt that Piaggio's contribution had become insignificant. He said, "Piaggio has become redundant to the joint venture...

As per the agreement, LML had to purchase the entire 23.6% stake in the company at the rate of Rs.14.06 per share. Some of the other terms of the agreement are shown in the box.

» The JVA of LML with Piaggio will be terminated. The exclusivity rights of LML will also terminate.

» LML shall retain non-exclusive rights to use all Piaggio technology received for all vehicles other than Piaggio motorcycle.

» Piaggio would become free to set up any business in India, including competing business except manufacture of motorized two-wheelers powered with lateral engine till December 31, 2007...