Tata Motors said on Wednesday it has agreed to buy Italian truck maker Iveco Group for 3.8 billion euros ($4.36 billion) after Italian truck manufacturers agreed to sell their defense operations to Leonardo. As part of the arrangement, Tata Motor will initiate an all-cash tender offer under the provisions of the sales of the defense business, at €14.1 per share. Tata Group Auto Major said it had entered into an agreement with Iveco Group to establish a commercial vehicle group that would support the commercial vehicle business of the company based in Mumbai.
According to Tata Motors, the tender offer totaled about €3.8 billion, excluding Iveco’s defense operations.
Iveco Group recorded a turnover of €15.289 billion in fiscal 24 years, including defense operations. Iveco Group NV is designed to produce and sell trucks, commercial vehicles, buses and defensive vehicles through its various businesses. In addition to powertrain applications, the group also provides a range of financial products and services to dealers and customers.
Iveco’s Ministry of Defense will be separated before the acquisition, with a deal value of 3.8 billion euros, equivalent to 34,200 crore (Ministry of Defense).
The quote price is set at Rs 14.1 (Rs 1,270) per share.
Iveco Group is a European commercial vehicle and mobility company.
Tata Motor also said the proposal would “converge two businesses with highly complementary product portfolios and capabilities, and have no overlap in their industrial and geographical footprint at all, creating a stronger, more diverse entity with a large global presence and sales of over 540k units per year and 540k units per year. In Europe (C.50%), India (C.35%) and the Americas (C.15%) allocated 2,200 billion+), with an attractive position in emerging markets in Asia and Africa.
The combined group will better invest and provide innovative sustainable mobility solutions by leveraging two supplier networks to serve customers around the world. Tata Motors said it will also unlock great growth opportunities and create significant value for all stakeholders in the dynamic market.
“By retaining each group’s industrial footprint and employee community, this complementarity also promises to promote a smooth and successful integration process,” Tata Motor added.
“This is a logical next step following the demerger of the Tata Motors Commercial Vehicle business and will allow the combined group to compete on a truly global basis with two strategic home markets in India and Europe. The combined group’s comprehensive businesses and greater reach will enhance our ability to invest boldly. I look forward to securing the necessary approvals and including the transaction in the coming months,” said Natarajan Chandrasekaran, Chairman, Tata motor.
Tata Motors said the acquisition is expected to support Tata Motor’s commercial vehicle business through the following methods.
- Extended features
- Create global players
- Take advantage of
- Diversified portfolio
Earlier on Wednesday, Tata Motors’ shares fell 3.5% on BSE, while stock fell 3.5%.
