Tata Motors Share Price Falls for 2nd Day: Is the Iveco Deal Spooking Investors?

Shares of Tata Motors slipped by 2.4% to an intraday low of Rs 652.05 on Thursday after the company announced the incorporation of a new wholly owned subsidiary in the Netherlands, a move closely tied to its planned €3.8 billion ($4.3–$4.5 billion) acquisition of Italian truckmaker Iveco Group.

The acquisition, which excludes Iveco’s defense business, marks Tata Motors’ most ambitious automotive deal since its purchase of Jaguar Land Rover in 2008 and is poised to significantly expand its commercial vehicle (CV) footprint in Europe and globally.

'A major industrial transaction was announced today that opens up new growth prospects for the Iveco Group, a historic Italian company, and its employees, attracting the interest of Tata Motors, a large Indian multinational. The merger project represents recognition of the value of Italian technology, Tata Motors said in its regulatory filing to BSE.

The Mumbai-based automaker's stock, which opened at Rs 660 and moved between an intraday high of Rs 657 and a low of Rs 652.05, later recovered to trade at Rs 670.90, up 0.37% over the previous close.

About the Iveco acquisition

Tata Motors’ acquisition of Iveco is structured via its newly formed Dutch subsidiary—TML Commercial Vehicles B.V.—which will serve as the holding company both for the Iveco transaction and for Tata Motors’ international CV operations.

The deal involves Tata Motors first acquiring a 27.1% stake from Exor (the Agnelli family’s investment holding, currently holding 43.1% voting rights in Iveco) and subsequently launching a tender offer to buy out remaining shareholders.

The tender offer is for all issued common shares of Iveco Group after the separation of its defense business, with a cash offer price of €14.1 per share. Completion of the transaction is contingent upon the formal separation and sale of Iveco’s defense operations, which are being acquired by Leonardo.

Tata Motors anticipates minimal disruption to Iveco’s existing operations, with no planned relocations—production facilities and employment are set to remain in Italy. The two companies’ portfolios and geographies are highly complementary, allowing for expansion with little overlap.

“The plan envisages that production facilities will remain in Italy, maintaining direct employment, related industries, and supply chains. No relocations are envisaged; instead, the focus is on solid international expansion through a collaboration with one of the world's leading vehicle manufacturers, avoiding operational overlap but offering clear growth opportunities,” added the filing.

Also Read: Tata Motors in Talks to Acquire European Truckmaker Iveco | Republic World

Incorporation of Dutch subsidiary

According to the company, the establishment of TML Commercial Vehicles B.V. is central to Tata Motors’ strategy to consolidate, optimize, and bring greater agility to its international commercial vehicle business. The subsidiary will streamline the management of overseas assets and facilitate the acquisition’s financial and operational structuring.

According to industry analysts, Tata Motors aims to leverage Iveco’s technology, especially in electric and hydrogen powertrains, to accelerate its global growth and competitiveness.

Exclusion of Defense Division

Notably, the acquisition excludes Iveco’s defense business, which was deemed a strategic national asset by Italian authorities and previously blocked from non-European ownership.

The proceeds from the defense business separation will go to existing Iveco shareholders; only the common shares of the commercial vehicle business are included in the offer.

Tata Motors’ Global Ambitions

The move comes amid Tata Motors’ sustained drive to globalize its commercial vehicle business as it faces stiffer competition and regulatory changes at home and abroad.

It may be recalled that homegrown automaker has undertaken internal restructurings in recent years, including separating its passenger and commercial vehicle lines for better strategic focus, and now intends to offer a broader and more innovative range in both established and emerging CV markets.