Tata Motors’ 3.8-billion euroIveco buyout set to make it world’s fourth-largest truckmaker
Tata Motors is looking to raise about 1bn euros via equity as part of its plans to term out the 3.8 billion euro bridge financing facility for acquiring Iveco Group, which will catapult it to the fourth largest big truckmaker globally, its top officials said on Thursday.
Tata Motors
CHENNAI: Tata’s acquisition of the commercial vehicle biz of Iveco may herald second coming for the Italian entity, which had strong financial and technology partnership with Ashok Leyland (ALL), archrival of Tata Motors (TaMo).
Tata Motors is looking to raise about 1bn euros via equity as part of its plans to term out the 3.8 billion euro bridge financing facility for acquiring Iveco Group, which will catapult it to the fourth largest big truckmaker globally, its top officials said on Thursday.
Somehow Iveco could not succeed in its India dream either via Hinduja-owned ALL or its plan to enter India later after ending collaboration with ALL which started rolling out Japanese Hino model engines and later from its own technology centre, near Chennai.
On Wednesday Tata Motors had announced that it would acquire Iveco Group, excluding its defence business, for euro 3.8 billion (nearly Rs 38,240 crore) in a deal which is set to be the Indian automaker’s biggest buyout.
Addressing a conference call, Tata Motors Group CFO PB Balaji said, “The funding of 3.8 billion euros has already been secured through bridge financing facility committed by Morgan Stanley & MUFG and this is expected to be syndicated, subsequently termed out by a combination of equity and long-term debt over next 12 to 18 months after the closure of the transaction.”
He further said, “We expect this transaction to close sometime by April next year, assuming all the regulatory approvals come through.”
“With this…we move into the number four in terms of ‘greater than six tonne’ trucks portfolio, and within touching distance of the two and the three and the fourth that are already there,” Balaji said.
As per an investor presentation by the company, after combining Iveco’s volumes, Tata Motors Group will have a total sales of 2.3 lakh units annually in the over 6 tonne trucks category same with the Volvo Group in the fourth position behind leaders Daimler Group (3.5 lakh units), CNHTC Group (2.5 lakh units), and Traton Group (2.4 lakh units).
Before the proposed acquisition, Tata Motors Group was the sixth largest with 1.8 lakh units, and Iveco was 17th with 50,000 units annually. Overall, the acquisition creates a stronger, more diversified entity with a significant global presence and overall sales of over 5,40,000 units per year.
