Automotive Holdings Group is facing legal action over claims it failed to disclose a simmering stoush before inking an $18 million takeover deal with European manufacturer KTM.
Automotive Holdings Group is facing legal action over claims it failed to disclose a simmering stoush before inking an $18 million takeover deal with Australian manufacturer KTM.
According to a writ lodged in the Supreme Court this week, KTM’s Australian entity wants AHG to grant it the indemnity allegedly promised under the deal or fork out damages for breach of contract.
The spat relates to a deal the two parties signed in 2019, under which KTM agreed to buy AHG’s majority stake in the group's motorcycle distribution arm for $18 million.
The agreement allegedly included a seller warranty, under which AHG swore it had no knowledge of any commercial disputes or court actions on foot at the time that KTM may inherit.
But KTM claims it uncovered that AHG had been sparring with Victoria-based Pole Position Motorcycles over allegations it wrongfully terminated their 2016 dealership agreement before its collapse in 2018.
In the writ, KTM says AHG neglected to mention the stoush, which predated the acquisition by almost three years.
KTM’s lawyers wrote to AHG in March 2022 in a bid to claw back indemnity costs, compensation it allegedly agreed to when it pushed go on the deal.
But AHG has denied liability, a move KTM claims constitutes a breach of its obligations under the deal and amounts to negligent, misleading and deceptive conduct.
This week, KTM has asked the court to intervene, demanding AHG make good on its promise to cover the costs of the dispute or fork out damages for breach of contract.
It’s also asking that AHG be made to pay interest on any compensation awarded and cover its legal bill.
The KTM-AHG agreement was signed just months before national car dealer Eagers Automotive took over the Perth-based group in an $800 million deal.
Eagers Automotive has been contacted for comment.