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January 6, 2021

CNH and FAW revive Iveco talks

CNH Industrial is again in talks with FAW over the future of truckmaker Iveco, the Italian-American group said after sources had told Reuters it had revived previously aborted negotiations.

By Olly Wehring

CNH Industrial is again in talks with FAW over the future of truckmaker Iveco, the Italian-American group said after sources had told Reuters it had revived previously aborted negotiations.

A spokesman for CNH Industrial, where new CEO Scott Wine took office this week, confirmed to the news agency the group was in preliminary discussions over Iveco with FAW Jiefang but declined to disclose further details.

"No final agreement around the scope or nature of cooperation has been reached at this time," the spokesman told Reuters. "Further information in line with statutory and regulatory requirements will be disclosed in due course."

Earlier, Reuters sources said talks had been revived after being put on hold last year.

The state-owned Chinese company had made a preliminary offer that valued Iveco at a little more than EUR3bn (US$3.7bin). CNH rebuffed the offer because it considered the valuation low, Reuters reported in September.

Reuters noted an Iveco sale would be an alternative to the 2019 CNH plan to split the industrial equipment and automotive group and list its lower-margin truck and bus business along with its FPT engine division in an effort to boost asset values and streamline its businesses.

The planned spin off by the group controlled by Exor, the holding company of Italy's Agnelli family, was initially targeted for early 2021 but had been delayed by the coronavirus crisis, Reuters noted.

The latest talks on Iveco future came as Changchun-based FAW, which makes heavy duty Jiefang brand trucks, looks to expand outside China in the next couple of years, a Reuters source said.

FAW has made an improved takeover offer in the latest discussions and wants to acquire all of the commercial vehicles business, including trucks and buses, as well as a minority stake in the FPT engine division, a second source told the news agency.

An investment in Iveco would help Jiefang gain access to the international commercial vehicles market, the first source added.

Iveco makes vans in China with state-owned SAIC Motor.

CNH also held talks with Chinese industrial conglomerate Shandong Heavy Industry Group late last year, two Reuters sources said.

One of the sources added Shandong Heavy Industry offered at least EUR3.5bn but had been outbid by FAW. The source did not give a figure, saying negotiations were continuing.

Separately, Iveco was in talks to jointly develop autonomous truck technology with Chinese startup Plus, which has a tie-up with Jiefang, one of the Reuters sources said.

Neither FAW, which has tie-ups with Volkswagen and Toyota Motor to make passenger vehicles in China, nor Shandong Heavy Industry responded to Reuters requests for comment.

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