Tata Motors is set to acquire Italian truck maker Iveco from its main shareholder, the Agnelli family, in a deal worth $4.5 billion or around 3.9 billion. This will be Tata Group’s second-largest acquisition after buying Corus and the biggest ever for Tata Motors. Back in 2008, Tata Motors had acquired Jaguar Land Rover for $2.3 billion.
A formal announcement is expected soon, as the boards of Tata Motors and Iveco are scheduled to meet to approve the deal. Iveco confirmed that it is in advanced talks for two separate transactions, one of which involves its defence business, which is not part of the Tata acquisition.
According to people familiar with the matter, Tata Motors will buy 27.1 percent of Iveco from Exor, the Agnelli family’s investment company, and will launch a tender offer to purchase shares from other minority shareholders. Exor currently holds 43.1 percent voting rights in Iveco. The defence business is being demerged and is expected to be either spun off or sold by the end of 2025. Iveco’s stock jumped 7.4 percent on Tuesday following news of the deal and has more than doubled this year, pushing the company’s valuation to $6.15 billion.
Tata Motors had a past joint venture with Fiat Motors, the flagship company of the Agnelli family. The longstanding relationship and mutual trust are believed to support the success of this deal. The acquisition will be routed through a Dutch entity fully owned by Tata Motors.
Iveco is the smallest among the major European truck makers and operates in markets across Latin America and North America, with Europe contributing 74 percent of its revenue. Tata’s commercial vehicle business, which currently earns 90 percent of its revenue from India, could benefit significantly in terms of global reach and technology.
A successful acquisition could take Tata’s commercial vehicle revenues from ₹75,000 crore to over ₹2 lakh crore. However, margins remain a concern as Tata’s current ebit margin is 9.1 percent while Iveco’s adjusted margin is around 5.6 percent. Iveco had projected its industrial business, including defence, could generate between 400 million and 450 million euros in free cash flow by 2025.
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