Tata Motors is preparing to acquire Italian commercial vehicle maker Iveco for $4.5 billion (₹39,000 crore), marking the automaker’s largest deal to date and the Tata Group’s second-biggest acquisition after Corus. The acquisition surpasses the company’s 2008 purchase of Jaguar Land Rover (JLR), which was valued at $2.3 billion.
Deal Structure and Timeline
The acquisition is expected to be formally announced soon, with the boards of Tata Motors and Iveco set to meet for approval. Tata will acquire a 27.1% stake from Exor, the Agnelli family’s investment arm, and plans to launch a tender offer to buy out remaining shareholders. Exor currently holds 43.1% of the voting rights in Iveco.
Defence Unit Not Included
The deal excludes Iveco’s defence business, which is being separated. Iveco had previously stated its intention to spin off or sell the defence segment by the end of 2025. This separation is expected to ease regulatory approval from the Italian government, which had earlier blocked a Chinese acquisition bid for Iveco in 2021.
Strategic Fit and Market Reach
Tata Motors aims to gain access to Iveco’s advanced technology, international market presence, and product range. While Tata’s commercial vehicle (CV) division earns 90% of its revenue from India, Iveco has a strong European footprint, contributing 74% of its income from the region, along with operations in North and Latin America.
Potential Revenue Boost and Margin Challenge
If successful, the deal could significantly boost Tata’s commercial vehicle revenue from ₹75,000 crore to over ₹2 lakh crore. However, margin concerns remain. Tata’s current EBIT margin is 9.1%, while Iveco’s adjusted margin in the CV segment is around 5.6%.
Previous Partnerships and Familiar Allies
Tata and the Agnelli family have a long-standing relationship, including past ventures with Fiat in India. Iveco’s board and Exor are reportedly supportive of the deal, which is being advised by Morgan Stanley (for Tata Motors), Goldman Sachs (for Exor and Iveco), and Clifford Chance (as legal advisor).
Iveco’s Current Performance and Market Position
Shares of Iveco rose by 7.4% following news of the possible acquisition. The company, now valued at $6.15 billion, is the smallest among Europe’s major truck manufacturers, competing with Volvo, Daimler, and Traton. In FY25, Tata Daewoo, a previous Tata acquisition, generated ₹5,394 crore in revenue, though margins dropped significantly.
Regulatory Steps and Next Moves
Tata plans to route the acquisition through a Dutch subsidiary fully owned by the company. The exclusivity agreement between Tata and Iveco ends on August 1. The acquisition, if concluded smoothly, is expected to transform Tata’s CV business on a global scale while meeting Italy’s conditions for strategic sectors.
