12:56 PM EDT, 07/30/2025 (MT Newswires) -- Harley-Davidson ( HOG ) on Wednesday agreed to divest an interest and over $5 billion of loans in its financial services unit under a partnership with KKR (KKR) and PIMCO, while the motorcycle maker's second-quarter results missed market estimates amid continued tariff-related impacts.

The company will sell 4.9% common equity interests in Harley-Davidson Financial Services to each partner. The subsidiary will sell more than $5 billion of existing consumer retail loan receivables and residual interests in securitized consumer loan receivables at a premium.

Harley-Davidson ( HOG ), which will retain control of the unit, expects the transaction to provide about $1.25 billion in discretionary cash. The company aims to use the proceeds to support demand-driven investments, pare $450 million of debt and return about $500 million to shareholders.

Harley-Davidson ( HOG ) shares were up 18% in Wednesday afternoon trade. The stock has lost 10% in value so far this year.

The deal is part of Harley-Davidson's ( HOG ) aim to turn the subsidiary to a capital-light financing business. KKR and PIMCO also agreed to buy about two-thirds of new retail loans generated by the subsidiary on an annual basis for at least five years.

"This transaction delivers benefits to all of Harley-Davidson's ( HOG ) stakeholders," Chief Executive Jochen Zeitz said in a statement. The group will have the flexibility to invest up to $300 million of additional funds into future growth opportunities, Zeitz said in the company's separate earnings release.

For the June quarter, Harley-Davidson's ( HOG ) net income dropped to $0.88 a share from $1.63 a year earlier, trailing the FactSet-polled consensus of $0.96. Revenue fell 19% to $1.31 billion.

In its core Harley-Davidson Motor Co. segment, revenue slipped to $1.04 billion from $1.35 billion, below Wall Street's view for $1.1 billion. Global motorcycle shipments tumbled 28% mainly due to planned reductions in dealer inventories and softening demand. Worldwide retail motorcycle sales were down 15%. Harley-Davidson Financial revenue decreased 2% to $257.4 million.

"Our second-quarter results continue to be impacted by a challenging commercial environment for discretionary products and an uncertain tariff situation," Zeitz said. The cost of new or increased tariffs implemented this year was $13 million in the second quarter, the company said.

Harley Davidson ( HOG ) opted not to reinstate its full-year outlook for its core segment due to ongoing uncertainties related to tariffs, discretionary product purchases and overall macro conditions. The company withdrew its guidance at the start of May.

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