Tata Motors is in the process of arranging a €3.875bn ($4.5bn) bridge loan to finance its intended purchase of the commercial vehicle (CV) division of Iveco Group.
This transaction is poised to be among the most significant of its kind in Asia for the current year, reported Bloomberg, citing familiar sources.
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The loan, which has a 12-month term, is backed by a letter of support from the Tata Group’s investment holding company, Tata Sons.
The financing arrangement is said to include a blended interest rate margin of 102.5 basis points above the Euribor benchmark.
Mitsubishi UFJ Financial Group, Morgan Stanley, and Morgan Stanley Senior Funding have been named as the underwriters for the loan, according to the sources.
As of now, Tata Motors has not provided a comment in response to inquiries about the loan.
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By GlobalDataThis prospective deal is part of a growing trend of loans being utilised to support cross-border mergers and acquisitions originating from the Asia Pacific region.
Should the acquisition proceed, Tata Motors would be expected to expand its influence in the European CV sector, building on its 2008 acquisition of Jaguar Land Rover.
In July, Tata Motors signed an agreement to acquire Italian truck maker Iveco’s commercial vehicle business in an all-cash voluntary tender offer. The transaction excludes Iveco’s defence segment.
The bridge loan is expected to be refinanced through a combination of equity and long-term debt within a period of 12 to 18 months.
The completion of the takeover is anticipated by April 2026, subject to the necessary regulatory clearances.
The Iveco Group encompasses seven distinct brands, offering a diverse product lineup that includes CVs, buses, powertrains, specialty vehicles, and financial services.
In recent developments, Iveco Bus, inaugurated a new prototype and testing centre in the Czech Republic.
