Months after Ratan Tata's death, Tata Motors seals biggest auto deal, buys Italian company for Rs 391200286500, company is...
Tata motors is all set to buy famous Italian truck making company Iveco from the Agnelli family. This will be the biggest deal of Tata motors as the giant is set to acquire the company for about $4.5 billion dollars, or 3.9 billion euros. The last significant acquisition by the company was in 2008, when it bought Jaguar Land Rover (JLR) for $2.3 billion dollars.
This acquisition would become the Tata group's second largest after Corus and the largest for its automotive division.
When will be the official announcement?
It is revealed that both Tata Motors and Iveco have scheduled board meetings on Wednesday in order to approve the deal. Iveco has also confirmed on Tuesday, that the company had engaged in 'ongoing, advanced' deals with various parties regarding two deals: once that would concern its defence operations and the other that for the remainder of the organisation.
Why Iveco is a bet for Tata motors?
According to sources, Tata motors plans to acquire 27.1% ownership from the Agnelli family's investment firm Exor, which currently holds 43.1% voting rights. Which will lead them to initiate a tender offer so they can acquire shares from small stakeholders.
The deal does not include the defence division with Tata motors. This comes after Iveco announced in May about its plans to either separate or divest the company's defence operation by the end of this year, and that they already received purchase proposals as well.
Hike in stakes?
Iveco's shares saw a significant increase of up to 7.4% during trading hours, rising its market value to $6.15 billion dollars, a twofold increase in the current year.
Both the company's boards, along with Exor, are extremely supportive of the potential transaction, given the longstanding alliance between the Agnelli family and the former chairman of the group, Ratan Tata.
This comes after a past joint venture between Agnelli-owned Fiat motors and Tata in India. The Agnelli family maintains significant investments in Ferrari, the dutch automotive conglomerate that encompasses the Fiat brand. The transaction involves Morgan Stanley from Tata's side and Goldman Sachs from Agnelli's, with Clifford Chance providing legal counsel.
'Discussions have been ongoing for the last one and a half months and have intensified in recent weeks,' said one of the sources. 'Both sides entered into an exclusivity agreement for bilateral negotiations. The exclusivity is due to lapse on August 1.'
This acquisition would be structured through a Dutch subsidiary, wholly owned by Tata motors. This acquisition presents opportunities for Tata motors, and helps them in expanding their commercial vehicle operations with access to advanced technology and expanded market presence. Iveco, generates most of its revenue from Europe (around 74%), and maintains operations across North and Latin America
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