After years of struggle with underfunding and as Europe’s fifth tier truck maker, Iveco has announced it has sold the truck company to Indian vehicle maker Tata.
In massive news today, the Italian owned brand said it had reached an agreement with the Indian group to sell the operation and become a part of the Indian based global automotive business, which has a huge footprint in the massive market on the sub-continent in trucks and cars, and which also controls the famed British car brands Land Rover and Jaguar.
Exactly what the deal means for Iveco’s Australian operations is not yet clear but given Tata’s aggressive and successful stewardship since taking over Jaguar/Land Rover there is little doubt it will drive Iveco hard.
Another un answered question about the purchase is wha twill happen to the deal that Iveco announced with Turkish based Ford Trucks of Europe back in March.
Iveco and Ford’s Turkish European truck making operation, Ford Otosan announced in March that the two companies were signing a joint venture agreement, which they said was a binding Joint Development Agreement (JDA), to design and engineer a new cabin for the heavy-duty trucks from both brands.
The companies said together under the joint venture they will outlay an estimated total expenditure of around $AUD 598 million (euro 343 million) to develop the cab.
The investment of more than half a billion Australian dollars, underlines the huge costs facing companies in developing new product, particularly with the added expense pressures involved with zero emission driveline developments, triggering the need for more joint venture design and engineering collaborations such as this. Where this new deal leaves that arrangement only Iveco and Ford Ottosan executives know at this stage.
The statement from Iveco and Tata which hit inboxes on Thursday afternoon, was full of bold corporate speak that big companies are want to indulge in, saying that the two companies had reached an agreement to create a ‘commercial vehicles group with the reach, product portfolio and industrial capability to be a global champion in this dynamic sector’.
The reality is that the Agnelli Family which pretty much controlled the Iveco share register was keen to free itself of the massive costs which lay ahead when it comes to developing new technologies and green powertrains.
The two companies described the deal as a recommended voluntary tender offer made by Tata for a new limited liability company, which is set to be incorporated under Dutch law, and which will be wholly owned by Tata Motors.
The companies said in their statement that the completion of the offer is conditional on the separation of Iveco’s defence business and, as such, the public offer is for all issued common shares of Iveco Group, after the separation of that business, at a price of $AUD 24.96 (EUR 14.1 ) per share, which they say represents a total price of $AUD6.7 billion or approximately EUR 3.8 billion, for the Iveco Group, minus its defence business and the proceeds from the defence business separation.
The deal involves a lot of corporate share dealing and various exceptions, but the bottom line is that the offer represents around a 25 per cent premium over the trading price of the Iveco shares and the Iveco Group board of directors unanimously and fully supported the offer and recommended it be accepted by the shareholders.
Iveco Group’s largest shareholder, Exor N.V , which is 50.7 per cent owned by Fiat scion and long time Italian master industrialist, Gianni Agnelli, has also committed to support the purchase proposal, and has said it would tender its shareholding to Tata, which represents approximately 27.06 per cent of Iveco Group shares and 43.11 per cent of voting rights
Tata has told the markets it has committed financing in place for the entire offer, assuring them that it can provide certainty of funds and a high certainty of deal completion
Tata says it is committed to “supporting and accelerating Iveco’s existing strategy and to ensure the long-term interests of all Iveco’s stakeholders, including employees, suppliers and customers” and said the deal is subject to obtaining the required merger control, foreign direct investment, EU Foreign Subsidies Regulation and financial regulatory clearances, and is expected to complete in the first half of 2026, which in its self could be an absolute labyrinth of bureaucracy.
The two companies are saying that, together, Iveco and Tata Motors commercial vehicle business will have estimated combined revenues of $ AUD 38.84 billion or approximately €22 billion across all its current markets, and they claim to have attractive positions in emerging markets in Asia and Africa.
They are estimating the new global business will be approximately 50 per cent reliant on Europe, 35 per cent on India and around 15 per cent in the Americas.
Natarajan Chandrasekaran, the chair of Tata Motors said the deal is a logical next step following the demerger of the Tata Motors Commercial Vehicle business and will allow the combined group to compete on a truly global basis with two strategic home markets in India and Europe.
“The combined group’s complementary businesses and greater reach will enhance our ability to invest boldly. I look forward to securing the necessary approvals and concluding the transaction in the coming months,” Chandrasekaran said.
Likewise the chair of the Iveco Group, Suzanne Heywood, said the company was proud to announce this strategically significant combination.
“This brings together two businesses with a shared vision for sustainable mobility and moreover, it reinforces prospects that the new combination will be strongly positive in terms of the security of employment and industrial footprint of Iveco Group as a whole,” Heywood said.
Olof Persson, the CEO of Iveco Group said that by joining forces with Tata Motors, it will unlock new potential to further enhance industrial capabilities,.
“It will also accelerate innovation in zero-emission transport, and expand our reach in key global markets and this combination will allow us to better serve our customers with a broader, more advanced product portfolio and deliver long-term value to all stakeholders,” said Persson.
In the context of the ongoing, rapid transformation of the global commercial vehicle industry, the combination of Tata and Iveco will certainly transform both companies, giving Tata a global platfrom to build its brand, as well as creating a robust platform with a global customer base and geographically diverse footprint.
The new company should be better equipped to drive better operating performance by spreading capital investments over larger volumes, generating efficiencies and reducing cash flow volatility inherent in the commercial vehicles sector. It will also enable the capabilities of Iveco Group’s successful powertrain business, FPT, to be further enhanced.
The Iveco board said it has the deal is in the long-term interests of Iveco, and that the sustainable success of its business and employees, customers, shareholders and other stakeholders and said it was unanimously supporting it and recommended tit be accepted by shareholders.
Tata says the goal of the deal is acquiring 100 per cent of Iveco’s shares followed by a delisting of Iveco Group from Euronext Milan.
It is expected that completion of the sale of the companies of Iveco’s defence business will occur ultimately on 31 March 2026. If the sale of the companies of Iveco’s defence business does not complete on or before 31 March 2026, Iveco’s defence business will be spun-off in a newly listed entity, so that the Offer can close as foreseen.
