Italy approves with conditions Iveco sale to Tata Motors: Report

Tata Motors has agreed to buy Iveco in a deal valued at 3.8 billion euros ($4.36 billion), after the truck-maker separately agreed to sell its defence business to Italian state-backed defense group Leonardo.

The Italian government has given its conditional approval to the sale of truck-maker Iveco to India’s Tata Motors, a parliamentary document showed on Friday.

The decision was made on October 31, the document added.

Tata Motors has agreed to buy Iveco in a deal valued at 3.8 billion euros ($4.36 billion), after the truck-maker separately agreed to sell its defence business to Italian state-backed defense group Leonardo.

Iveco, which also makes buses and engines, is controlled by Italy's Agnelli family through its investment company Exor, opens new tab, which currently owns a 27.1% stake in the Turin-based group, with 43.1% of voting rights. Exor has agreed to hand its stake in Iveco to Tata.

"The offer would bring together two businesses with highly complementary product portfolios and capabilities and with substantially no overlap in their industrial and geographic footprints," Tata and Iveco said.

The combined group would have a significant global presence, with sales of over 540,000 units per year and revenues of around 22 billion euros.

Iveco, which last year made 74% of its revenues in Europe, could prove a good fit for Tata Motors. The Indian manufacturer controls Jaguar Land Rover in the passenger car sector, but has virtually no presence, nor manufacturing footprint, in the European commercial vehicle industry.

The smallest among Europe's leading truck makers - a market led by Volvo (VOLVb.ST), opens new tab, Daimler, opens new tab and Traton (8TRA.DE), opens new tab - Iveco has often been seen as a potential M&A candidate. However, its presence in defence made a deal more difficult.

Milan-listed shares in Iveco rose around 25% since mid-July, when Reuters first reported Tata was in talks to acquire the company. They closed at 19.01 euros on Wednesday.

Iveco employs around 36,000 people, including 14,000 in Italy, and the deal with Tata is expected to draw scrutiny from the Italian government.