Iveco Confirms Plan to Break Up Company
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Iveco Group NV confirmed it is planning to break up the company, saying it is in advanced discussions to sell its defense unit and the commercial truck manufacturing operations to separate buyers.
The statement issued July 29 came after Bloomberg reported that the company was poised to announce a sale of the defense unit to Leonardo SpA and the commercial trucking business to India’s Tata Motors Ltd. as early as July 30, when it’s scheduled to report earnings.
Shares of Iveco, which is controlled by Fiat’s founding Agnelli family, surged as much as 7.4%. The stock has more than doubled this year, valuing the company at 5.6 billion euros ($6.1 billion).
While negotiations are advanced, they could still be delayed or fall apart, people familiar with the matter said earlier, asking not to be identified because the talks are private.
The board is evaluating all aspects of the potential transactions and will keep market updated, Iveco said in the statement.
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Selling the defense unit to Leonardo would satisfy the demands of the Italian government to keep the business in local hands. That would help pave the way for a deal with Tata for the rest of the business, which includes commercial trucks, powertrains, buses and other specialty vehicles.
A sale of Iveco would also extend an effort by Exor NV, the Agnellis’ investment vehicle, to diversify its interests from the automotive sector toward areas like health care, luxury goods and technology.
For Tata, a strategic acquisition would significantly strengthen the company’s European operations and commercial vehicle production. The move would also enable the company to elevate its commercial vehicle design and technology and appeal more to European buyers.
Leonardo, which is bidding with joint venture partner Rheinmetall AG for the defense unit and builds specialized vehicles for defense and civil protection including under the IDV brand, has been under pressure by the Italian government to reach a compromise on price.
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Leonardo bid about 1.6 billion euros ($1.9 billion) including debt, Bloomberg News previously reported. While that trailed rival proposals from Franco-German tank maker KNDS NV and Czechoslovak Group, the bid was high enough to improve the chances of a deal with the Italian-German partners, the people said.
In parallel, Iveco has been holding talks for several months with Tata, the owner of Jaguar Land Rover.
Representatives for Exor and Leonardo declined to comment, while Tata didn’t respond to a request for comment.
Written by Tommaso Ebhardt, Baiju Kalesh, Alberto Brambilla and Aaron Kirchfeld
