Tata Motors acquires Iveco's CV business for $4.36 billion in its largest deal

Mint

4 days ago

Tata Motors Ltd will acquire Italian truck and bus maker Iveco for $4.36 billion as it seeks to boost its commercial vehicle business ahead of the demerger expected by the end of this year.
The country's largest commercial vehicle player will assume control of Italy's Agnelli family-backed Iveco, an acronym for Industrial Vehicles Corp., in its largest acquisition ever, the company announced on Wednesday. The Agnelli family founded the Fiat automotive group.
The offer price is at a 34-41% premium to the volume-weighted average price for the three months to 17 July of 16.02 euros, said Tata Motors.
The company acquired Jaguar Land Rover in 2008 for $2.3 billion. The acquisition is the second largest for the Tata Group after Tata Steel Ltd's purchase of Corus Group for $13.1 billion in 2007.
'This 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," Natarajan Chandrasekaran, chairperson of the Tata Group, said. '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."
As part of the deal, Tata will acquire the trucks, bus and powertrain businesses but not the defence business.
Deal to be completed by June 2026
According to Tata Motors, the offer is expected to conclude by April to June 2026. The separation of the defence business is a key condition for the deal. Iveco will separately sell the defence business.
The combined Tata Motors and Iveco group would have a significant global presence, with sales of over 540,000 units and over $25 billion in revenue. Europe would account for half of the combined group's total sales, followed by 35% in India and the remaining 15% in the Americas.
Tata Motors has lined up $4.36 billion in funding from Morgan Stanley Bank, N.A., Morgan Stanley Senior Funding, Inc. and MUFG Bank, Ltd, said the statement.
The company said that the acquisition will allow it to diversify its portfolio and expand internationally.
'The offer would bring together two businesses with highly complementary product portfolios and capabilities and with substantially no overlap in their industrial and geographic footprints, creating a stronger, more diversified entity with a significant global presence and sales of over 540k units per year," Tata Motors said.
Iveco struggles in Europe
Iveco posted revenue of 15.3 billion euros in 2024, a decline of 4% year-on-year.
Put together, three verticals made up about 94% of the company's business last year. It has been struggling for growth as it gets about three-fourths of its revenue from Europe, where the business contracted about 7% in 2024.
The truck vertical made up about 58% of the company's revenue, while powertrain contributed 21% and the bus segment accounted for 15%. The revenue of truck and powertrain businesses fell 6% and 17%, respectively, last year.
For Tata Motors, the commercial vehicle business is the second largest contributor to overall revenues, contributing 17% to the topline in financial year 2025 at ₹75,055 crore.
In FY25, the overall sales volume for the CV business declined 5% to 384,704 units for Tata Motors. Exports stood at 18,333 units, growing 3%.
Iveco's board has unanimously approved the deal, stating that it is in the company's long-term interest.
'By joining forces with Tata Motors, we are unlocking new potential to further enhance our industrial capabilities, accelerate innovation in zero-emission transport, and expand our reach in key global markets," Olof Persson, CEO of Iveco Group, said on the deal.
"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."