Iveco deal: Here's how Tata Motors plans to fund the acquisition

Indian Express

7 days ago

Tata Motors on Thursday announced plans to raise around 1 billion euro (approximately $1.14 billion or Rs 10,000 crore) in equity to help repay the loan used for its 3.8 billion euro (Rs 38,000 crore) acquisition of Iveco's trucks and bus business. The company also hinted at the possibility of launching Iveco vehicles in India and Tata vehicles in markets where Iveco has a strong presence.
The proposed acquisition — Tata Motors' largest since its $2.3 billion purchase of Jaguar Land Rover in 2008 — excludes Iveco's defence operations. It will be funded initially through a 3.8 billion euro bridge loan committed by Morgan Stanley and MUFG. Tata Motors aims to repay the debt over four years, using a mix of internal cash flows, proceeds from a potential 1 billion euro equity raise (via rights issue or QIP) and monetisation of its stake in Tata Capital.
'We plan to refinance the bridge loan with a mix of long-term debt and equity within 12 to 18 months after the deal closes,' PB Balaji, CFO of Tata Motors, said in a conference call. 'We are targeting to repay the entire acquisition debt over a four-year period.'
Tata Motors expects the deal to be earnings accretive from the second year onwards, driven by cost synergies and the relatively low acquisition multiple.
Tata Motors Executive Director Girish Wagh said the product portfolios of Tata Motors and Iveco complement each other in both pricing and capability. 'Iveco brings strong technology in areas like powertrain electrification, hydrogen and ADAS. Combined with our frugal engineering and design-to-value strengths, we see strong competitive advantages emerging,' Wagh said.
He said revenue synergies could come from launching Iveco products in India and Tata vehicles in regions like Latin America where Iveco is established. However, he clarified that the Iveco brand, operations, and distribution channels would continue to operate independently post-acquisition.
Tata Motors was in talks with Iveco for the last six months.
Once completed, the acquisition will give Tata Motors access not only to new products, platforms, and manufacturing facilities but also to a well-established sales and after-sales network — not just in Europe, but also in Latin America, which typically takes years to build, noted Wagh. 'We'll also gain access to strong retail financing capabilities in several of these markets,' he said.
Iveco has over 32,000 employees globally as of December 2024, excluding defence and discontinued operations.