This is the largest international acquisition of TATA since the download of Jaguar and Land Rover in 2008.
Photo: Iveco
Iveco is definitely passing into the hands of the Indian company Tata.
The Indian car concern Tata Motors concluded an agreement to buy an Italian commercial vehicle manufacturer Iveco for approximately EUR 3.8 billion. This is the largest international acquisition of the company since the download of Jaguar and Land Rover in 2008. This step is to strengthen the global position of Tata Motors.
Before the signature of the contract, the key step – the separation of the Iveco Defence Vehicles defense division took place. This part of the company was sold to the Italian company Leonardo for 1.7 billion euros. The separation allowed the sale of the commercial division to take place without complications related to the sensitive military program subject to a strict state control.
Iveco started negotiations with Tata Motors in a difficult financial situation. In the previous year, his profit decreased and the operating margin was much lower than expected. In the first half of the year, the company spent more than half a billion euros from operating money, which put pressure on it to reduce costs and find a strong partner to help stabilize it.
The Italian government considers the agreement to be significant not only from economic but also from social terms. During the sale, it has received a commitment to maintain production capacities, jobs and key technology know-how for at least two years. This commitment is intended to reassure the concerns of employees and trade unions worried about the transfer of production outside Italy.
Despite some optimism, experts point out that the integration of such a large European society into the Indian Group’s portfolio will be demanding and will require a sensitive approach, especially given the differences in corporate culture and market specifics.
Upon completion of the download, Tata Motors and Ivec will be among the world’s largest truck manufacturers. Combined revenues will reach approximately EUR 22 billion per year, with half of the income from the European markets, more than a third of India and the rest of the US and other regions.
