Tata Motors is in negotiations to acquire Italian truck maker Iveco for $4.5bn, in what is set to be the company's second-largest acquisition after steel company Corus, reported The Economic Times (ET), citing sources familiar with the ongoing discussions.
Recently, Reuters had reported on the potential sale talks between the Agnelli family, the primary shareholders of Iveco, and interested parties.
A formal announcement regarding the takeover could be made today, according to the sources.
The boards of both companies are scheduled to meet today to finalise the transaction. The details of the deal are currently private, with the sources choosing to remain anonymous.
On 29 July, Iveco indicated that it was engaged in "ongoing, advanced" discussions for two separate transactions concerning its defence business and the remaining operations.
According to ET, Tata Motors plans to acquire a 27.1% stake from Exor, the Agnelli family's investment firm, and subsequently extend a tender offer to purchase the remaining smaller shareholders.
The defence segment of Iveco is being demerged and will not be included in the transaction with Tata Motors.
The Tata Group is “confident” in securing 100% ownership of Iveco, excluding the defence business, which is set to be spun off or sold by the end of 2025.
The Agnelli family, who have historical ties with the Tata Group and its former chairman Ratan Tata, are believed to be supportive of the sale to Tata Motors.
The family also has significant stakes in Ferrari and controls Stellantis, which includes the Fiat brand.
Advisory firms Morgan Stanley and Goldman Sachs are providing guidance to Tata Motors and the Agnelli family respectively, with Clifford Chance serving as the legal advisor.
Plans are in place for Tata Motors to conduct the transaction via a fully-owned Dutch entity.
ET noted that despite attempts to contact both Tata Motors and Tata Sons, responses were not received before the press deadline.
Similarly, an Iveco spokesperson did not reply to ET's detailed questionnaire.
Iveco, which is said to be the smallest of the major European truck makers, has long been viewed as a potential acquisition target.
However, its defence business has been of strategic importance to the Italian government, which previously blocked a bid from the Chinese company FAW. After being controlled by the Agnelli's CNH Industrial, Iveco was spun off and separately listed in early 2022.
According to analysts, selling the defence unit to a local entity could appease the Italian government's demands to keep the business domestically controlled.
This would also smooth the path for Tata Motors to acquire the rest of Iveco's business, which includes commercial trucks, buses, powertrains, and specialty vehicles, stated the publication.
For Tata Motors, this acquisition is expected to provide access to new technology and markets.
Tata's commercial vehicle division, which is predominantly focused on the Indian market, is also set to be listed independently.
