Italy’s Iveco sells defence business to Leonardo, commercial business to Tata Motors

Ariete C2 Main Battle Tank | Photo: Iveco Defence Vehicles

Italian heavy and defence motor vehicle company, Iveco, announced on Wednesday its decision to sell off its defence vehicles business to Italian defence company Leonardo and the rest of its business, which includes trucking, to India’s Tata Motors. While the deal with Leonardo is valued at €1.7 billion, the transaction with Tata Motors amounts to €3.8 billion.

In statements issued on Wednesday, Iveco said, ‘Iveco Group N.V. (EXM: IVG) announces the signing of a definitive agreement to sell its Defence Business (IDV and ASTRA brands), to Leonardo S.p.A. (BIT: LDO), a leading European defence and security company, for an enterprise value of €1.7 billion. The transaction will create an Italy- based, European champion in the land defence segment with the scale and capabilities to compete globally.’

It added, ‘Iveco Group N.V. (“Iveco Group” or “Iveco”) (EXM: IVG), a European leader in commercial vehicles and mobility, and Tata Motors Limited (“Tata Motors”) (NSE: TATAMOTORS), a global automotive leader, announce that they have reached an agreement to create a commercial vehicles group with the reach, product portfolio and industrial capability to be a global champion in this dynamic sector.’

‘The transaction is expected to be complete no later than 31st March 2026, subject to customary regulatory approvals and carve-out completion. On completion, Iveco Group intends to distribute the net proceeds of the transaction, subject to closing adjustments, to shareholders via an extraordinary dividend,’ said the statement.

It quoted the CEO of Iveco Group, Olof Persson, as saying, “This agreement propels Iveco Group’s Defence Business into its proper dimension as a key contributor alongside Leonardo in the creation of a focused, world-class player in land defence activities. Our colleagues in the Defence Business – who have done a tremendous job in building this business, responding to the growing need both for land defence vehicles and the technologies we have developed – will become part of a group with the scale and integrated capabilities to compete on all levels and for all platforms, with all the positive potential for innovation and continuous development.”

These plans had been announced by Iveco in February, with the company saying, ‘The landmark transaction announced today means that the employees of IDV and ASTRA will become an integral part of a significantly larger business, that will be better able to invest and compete in a segment whose strategic importance is paramount. By combining IDV and ASTRA’s mobility solutions and protected platforms with Leonardo’s advanced systems, the partnership will deliver full-spectrum, land defence capabilities for Italy, Europe and at a global level.’

Iveco said:

‘The envisaged recommended voluntary tender offer (the “Offer”) will be made by TML CV Holdings PTE LTD or a new limited liability company to be incorporated under Dutch law (the “Offeror”), which will be wholly owned, directly or indirectly, by Tata Motors. The completion of the offer is conditional, inter alia, on the separation of Iveco’s defence business and, as such, the public offer is for all issued common shares of Iveco Group after the separation of that business, at a price of EUR 14.1 (cum dividend, excluding any dividend distributed in relation to the sale of the defence business) per share in cash (the “Offer Price”). The Offer represents a total consideration of approximately EUR 3.8 billion for Iveco Group, excluding Iveco’s defence business and the net proceeds from the defence business separation.’

The statement quoted, Natarajan Chandrasekaran, Chairman of Tata Motors, as sying, “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 statement said ‘Together, Iveco and the commercial vehicle business of Tata Motors will have combined revenues of c.€22bn (INR 2,20,000Cr+) split across Europe (c.50%), India (c.35%) and the Americas (c.15%),’ and quoted Suzanne Heywood, Chair of Iveco Group, as saying, “We are proud to announce this strategically significant combination, which brings together two businesses with a shared vision for sustainable mobility. Moreover, the reinforced prospects of the new combination are strongly positive in terms of the security of employment and industrial footprint of Iveco Group as a whole.”