Tata Motors late on Wednesday said it will buy the commercial vehicle division of Italy’s Iveco Group N.V. for a total consideration of around €3.8 billion, its biggest acquisition and the second-biggest within the Tata Group.
Tata Motors
A voluntary tender offer will be made by Tata Motors’ subsidiary TML CV Holdings PTE, a new limited liability company to be incorporated under the Dutch law. The completion of the offer hinges on the separation of Iveco’s defence business.
The offer would bring together two businesses with highly complementary product portfolios and capabilities with substantially no overlap in their industrial and geographic footprints, creating a stronger, more diversified entity with significant global presence and sales of over 540,000 units per year.
Together, Iveco and the commercial vehicle business of Tata Motors will have combined revenue of €22 billion (Rs 2,20,000 crore) split across Europe (50%), India (35%) and the Americas (15%) with positions in emerging markets in Asia and Africa.
The combined group will be better positioned to invest in and deliver innovative, sustainable mobility solutions by leveraging supplier networks of both the companies to serve customers globally. It will also unlock superior growth opportunities and create significant value for all stakeholders in a dynamic marketplace, Tata Motors said.
Natarajan Chandrasekaran, chairman, Tata Motors, said: “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 complementary businesses and greater reach will enhance our ability to invest boldly. I look forward to securing the necessary approvals and concluding the transaction in the coming months.”
The public offer is for all issued common shares of Iveco Group after the separation of the defence business, at a price of €14.1 per share. This will result in delisting of Iveco shares from the Euronext Milan.
Tata Motors’ plans
Tata Motors is in the process of separating its commercial vehicle business unit and housing it under a second listed company. The company believes that this separation would allow it to operate the CV unit more freely and give the business the focus it deserves. This process is expected to get completed before the end of the December quarter.
The new company will be able to drive better operating leverage by spreading its capital investments over larger volumes, generating important efficiencies and reducing the cash flow volatility inherent in the commercial vehicles sector. It will also enable capabilities of Iveco Group’s successful powertrain business, FPT, to be further enhanced, Tata Motors said.
The agreement comes nearly 20 years after both the companies had agreed to sell each other’s vehicles through their own distribution channels in India and overseas. Tata Motors was to sell Iveco’s trucks and Iveco was to market Tata Motors trucks outside of India.
The Agnelli family was one of the original founders of Fiat, the first foreign multinational automaker that had joined hands with Tata Motors in 2006-07. The partnership was a result of a fine friendship between Fiat’s then chairman Luca Montezemolo and Tata Group patriarch Ratan Tata.
Tata Motors commercial vehicle division ended FY25 with a volume decline of 6% at 342,910 units, against 366,100 units sold in FY24, as per data shared by the Society of Indian Automobile Manufacturers. Exports formed a minuscule part of the company’s operations, with less than 5% of the production being sold outside of India. Export volumes grew 3% during FY25 to 18,164 units.