Tata Motors to acquire Iveco for $4.5 billion in its biggest deal yet

Tata Motors is set to acquire Italian truck manufacturer Iveco from its primary stakeholder, the Agnelli family, in a transaction valued at $4.5 billion, according to a report by The Economic Times. This would mark the Tata Group’s second-largest acquisition, following its purchase of Corus, and the largest deal to date for the automotive division. Tata Motors had acquired Jaguar Land Rover (JLR) for $2.3 billion in 2008.

The boards of Tata Motors and Turin-based Iveco are meeting on Wednesday to approve the transaction, The Economic Times reported. An official statement regarding the acquisition could be made as early as Wednesday.

Iveco in talks over defence and core operations

On Tuesday, Iveco confirmed it was engaged in “ongoing, advanced” discussions with multiple parties concerning two separate transactions—one involving its defence segment and the other relating to the remainder of the business.

The company had previously announced in May its intention to move forward with plans to either divest or spin off its defence operations by the end of 2025, stating it had already received offers from potential buyers.

In addition to trucks, Iveco also produces buses and engines, and currently has a market capitalisation of approximately $4.9 billion. Exor holds a 27.1 per cent share in Iveco, along with 43.1 per cent of the voting rights in the truck manufacturer.

Morgan Stanley, Goldman Sachs advising on Tata Motors-Iveco deal

Morgan Stanley is working with Tata Motors on the deal, while Goldman Sachs is advising the Agnelli family and Iveco. Legal counsel for the transaction is being provided by Clifford Chance. Tata Motors intends to execute the deal through a Dutch-based entity, which will be wholly owned by the company.

Discussions had been underway for the past one and a half months and had gained momentum in recent weeks, according to the report. Both parties had signed an exclusivity agreement for bilateral negotiations, which is set to expire on Aug 1.

Despite being one of Europe’s leading commercial vehicle brands, Iveco remains the smallest among the top players—a group led by Volvo, Daimler, and Traton. Due to its size, it has long been viewed by investors and analysts as a potential target for mergers or acquisitions. However, its involvement in the sensitive defence sector has historically made such deals more complex and limited the number of eligible buyers.

Any merger or acquisition involving Iveco is likely to come under scrutiny from Italian authorities through Rome’s 'golden power' legislation, which grants the government the authority to impose conditions on transactions involving companies considered to be of strategic national interest.

The company employs around 36,000 individuals globally, including 14,000 based in Italy.