Tata Motors Poised to Acquire Italy’s Iveco for $4.5 Billion in Landmark Deal

Tata Motors is close to acquiring Italian commercial vehicle manufacturer Iveco from its main stakeholder, the Agnelli family, in a deal valued at $4.5 billion, according to a report by The Economic Times.

If finalized, this would mark Tata Group’s second-largest acquisition, following its $12.9 billion purchase of Corus in 2007, and the largest-ever acquisition for Tata Motors.

The Indian automaker previously bought Jaguar Land Rover (JLR) in 2008 for $2.3 billion.

The report stated that the boards of Tata Motors and Turin-headquartered Iveco are scheduled to meet on Wednesday to approve the deal. An official announcement is expected to follow the board meeting.

Iveco Engaged in Talks to Divest Defence and Commercial Units

On Tuesday, Iveco confirmed it was in “ongoing, advanced” talks with multiple parties concerning two separate transactions—one for its defence segment and another for its core commercial operations.

Earlier, the company had shared plans to either sell or spin off its defence arm by the end of 2025. Iveco revealed that it had already received offers for the defence unit.

The firm also manufactures buses and engines, alongside its trucks. Iveco currently holds a market capitalisation of around $4.9 billion. Its largest stakeholder, Exor—the investment arm of the Agnelli family—owns 27.1% of its equity and 43.1% of voting rights.

Morgan Stanley is advising Tata Motors on the deal, while Goldman Sachs is working with Iveco and Exor. Legal guidance is being provided by the UK-based law firm Clifford Chance.

Tata Motors plans to carry out the acquisition via a Dutch-based special purpose entity that will be fully owned by the Indian auto manufacturer, according to The Economic Times.

The discussions have been ongoing for six weeks and have gained momentum recently. Both parties are bound by an exclusivity agreement, which is valid until August 1, allowing them to conduct bilateral negotiations without outside interference.

Regulatory Hurdles May Arise in Defence-Linked Transaction

While Iveco is one of Europe’s leading commercial vehicle producers, it is the smallest among the top-tier players such as Volvo, Daimler, and Traton.

This has often made it a potential takeover target in the eyes of investors and industry analysts.

However, the company’s defence business has posed regulatory challenges, limiting the number of interested buyers. Any major transaction involving Iveco is expected to face scrutiny under Italy’s ‘golden power’ rules.

These regulations allow the Italian government to place conditions on acquisitions involving companies deemed strategically important to the nation.

Iveco has around 36,000 employees globally, with 14,000 based in Italy. If successful, the deal will see Tata Motors acquiring the Italian truck business in what would be the company’s second-largest acquisition after Corus.

Boards Likely to Approve the Deal Soon

Media reports suggest that the boards of Tata Motors and Iveco are expected to finalize the acquisition during a meeting scheduled for July 30, 2025. Tata Motors plans to acquire Exor’s 27.1% stake in Iveco, as well as its 43.1% voting rights.

Iveco recently confirmed that it is in talks with multiple buyers and is in the process of splitting its operations, intending to sell its defence and commercial vehicle units separately.

“The board of directors of the company is in the process of carefully reviewing and evaluating all aspects of these potential transactions,” the firm said in a statement.

Stock Market Reaction to Acquisition Buzz

Following news of the potential acquisition, shares of Iveco rose by 7.4% on Tuesday.

On the other hand, shares of Tata Motors dropped 3.9% to Rs 665.45 on the Bombay Stock Exchange (BSE). On Wednesday, July 30, shares of Tata Motors fell further, registering a decline of more than 4%.

Iveco confirmed that talks are ongoing to sell both its defence and commercial truck operations. Sources told CNBC that discussions with Tata Motors likely involve the commercial vehicle segment.

If the deal proceeds, it will become Tata Group’s second-largest acquisition and Tata Motors’ biggest, surpassing the 2008 JLR purchase.

Strategic Importance for Tata Motors

According to a note by brokerage firm JPMorgan, 70% of Iveco’s industrial business revenue comes from trucks, with the remaining split equally between buses and powertrain components.

In 2024, Iveco held a 13.3% market share in the Light Commercial Vehicles (LCV) segment and an 8% to 9% share in the Medium and Heavy Commercial Vehicles (MHCV) segment.

The acquisition could help Tata Motors scale up and access advanced powertrain technologies.

Tata Motors is also in the process of demerging its Commercial Vehicle (CV) business, which is primarily focused on the Indian market. The CV segment commands a 49% market share in the heavy segment and 30% in the LCV category.

In the previous fiscal year, it generated Rs 75,000 crore in revenue, Rs 8,800 crore in EBITDA, and Rs 7,400 crore in free cash flow. The demerger is expected to be completed by December 2025, and the segment is likely to be net cash positive at the time.