Tata Motors shares fall 4% on news of potential acquisition of Iveco Group’s trucking business

Shares of Tata Motors Ltd. the manufacturer of passenger and commercial vehicles fell over 4% on Wednesday, July 30, after sources told CNBC-TV18 that the company may acquire Italy-based Iveco Group’s truck business for $4.5 billion from the Agnelli family.Iveco group confirmed that it is indeed in talks to sell its defence and commercial truck manufacturing business. The talks are likely to be ongoing with Tata Motors to sell the commercial trucking business, sources said.

In case the acquisition does materialise, it will be Tata Group’s second largest acquisition ever, after the Corus deal decades earlier. This will also be Tata Motors’ largest acquisition, after the $2.3 billion Jaguar Land Rover deal in 2008.

The boards of both Tata Motors and Iveco are likely to approve the deal today, sources added.Brokerage firm JPMorgan wrote in a note that 70% of Iveco’s industrial business revenue comes from trucks and 15% each from buses and powertrain. The Group had a 13.3% market share in 2024 in the Light Commercial Vehicles segment, along with a 8% to 9% share in the Medium and Heavy Commercial Vehicles segment.

The deal could provide enhanced scale and give access to powertrain technologies to Tata Motors. The company is also undergoing a demerger, where the Commercial Vehicle business will function as a separate entity.

Tata Motors’ Commercial Vehicle business is largely India-focussed with a 49% market share in heavy and 30% share in the Light Commercial Vehicles segment. The segment posted revenue of ₹75,000 crore, Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of ₹8,800 crore and free cash flow of ₹7,400 crore during the previous financial year. This business should be net cash at the time of the demerger, which is likely to be completed by December 2025.

Shares of Tata Motors are trading 3.7% lower at ₹667.8.