Tata Motors set for their biggest purchase, to buy Iveco in $4.5 billion deal

New Delhi: Tata Motors is set to buy Italian truck maker Iveco from their principal shareholder, the Agnelli family for $4.5 billion, which makes it the Tata group’s second-largest acquisition after Corus. It will also be the largest ever for an automobile major. After this update, the Tata Motors share fell by 3.9 per cent during the morning trade. 

This news comes at a time when Tata Motors are demerging their business, splitting commercial vehicle and passenger vehicle,  into two publicly traded companies, with one having the CV while the other will have PV, which will have Jaguar Land Rover. According to sources of the Economic Times, Tata would be buying 27.1% of Iveco from Exorm, the Agnelli family’s investment company. Following the acquisition would be followed by a tender offer to buy the smaller shareholder group’s stake. 

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Exor also at present holds 43.1 per cent of the truck manufacturer’s voting rights. The report also said that the boards of Tata Motors and Iveco will be meeting on Wednesday and could go ahead with the transaction. 

Iveco are themselves at present demerging their defence business and might be part of the Tata Motors as well. Iveco have themselves said that they are in advanced talks with two separate parties for two different business deals for their defence business and the rest of the company as well. 

This deal would mark Tata Motors’ biggest purchase, going past their earlier acquisition of Jaguar Land Rover, which cost $2.3 billion in 2008. After JLR came to Tata Motors, there was an evident rise in the company’s dealings with the SUV range, with vehicles like Harrier and Safari getting a much more luxurious interior and styling overall. It has even taken clues from the safety features. 

We have even seen the sub-four-meter range getting cars like the Nexon, and now even the electric vehicle platform is taking elements from JLR with the British company’s Electrified Modular Architecture (EMA) platform that will underpin Tata’s premium electric vehicle. The overall JLR platform has elevated Tata Motors in the PV segment, giving serious competition in the market. Tata Motors are reportedly planning to route the transaction via a Dutch entity that will be completely owned by the company.