Business Desk – Tata Motors-Iveco Deal: The Iveco Group Takeover Deal of 3.82 billion euros i.e. about 3.8 billion euros of Tata Motors, one of the biggest auto companies of the country, has now reached the decisive phase. After receiving the necessary regulatory approvals, a tender offer of 14.10 euros per share will start for Iveco shareholders from September 7. This process will continue till October 26.
Tata Motors aims to gain complete control over Italian truck and commercial vehicle company Iveco. The company has already received the support of Exor, Iveco's largest shareholder. Exor has agreed to offer approximately 27.06% of the ordinary shares in the offer to Tata Motors. Now the real challenge is to bring the remaining shareholders on board.
All major regulatory approvals completed
Tata Motors said Italy's securities regulator Consob approved the tender offer documents on September 3. Earlier, the approval of the European Central Bank had also been received on 1 September. According to the company, necessary competition, foreign investment and other regulatory approvals have also been completed.
Tata Motors MD and CEO Girish Wagh said that the launch of the tender offer is an important milestone in the deal. He says that by combining the strengths, capabilities and global presence of both the companies, a more strong and competitive commercial vehicle business can be created.
Iveco Board also supported the offer
Iveco's board has unanimously recommended an offer of 14.10 euros per share. The independent directors of the company have also considered it financially fair for the shareholders. Board advisor Goldman Sachs, in its updated opinion on September 4, described the offer as financially appropriate. The independent directors are advised by Rothschild & Co.
Why is 80% stake most important?
After the merger of Exor's 27.06% stake with Tata Motors, 72.94% shares of Iveco remain with the public shareholders. Tata Motors' initial offer is based on acceptance of 95% of the shares. If the company acquires 95% or more stake, then the shares of the remaining minority shareholders can be acquired through the legal process.
However, if the Back-End Resolution is approved in the meeting on October 16, then the minimum approval limit may be reduced from 95% to 80%. After acquiring 80% stake, Tata Motors can take complete control of Iveco and move towards delisting it from Euronext Milan.
Tata Motors will get bigger global scale
After the merger of commercial vehicle business of Tata Motors and Iveco, both the companies can sell more than 5.90 lakh vehicles annually. The annual revenue of the combined business is said to be around 21 billion euros i.e. approximately Rs 2.28 lakh crore. Europe's share in this will be around 46% and India's share will be around 32%.
What will be the impact on the plant and employees?
Tata Motors has also given some non-financial commitments for two years. These include maintaining Iveco's operational headquarters in Turin, continuing capital expenditure planning and avoiding any direct plant closures as a result of the deal.
Iveco has about 33 thousand employees. The company has 16 industrial plants and 22 R&D centres. Its business includes commercial vehicles, buses, financial services and FPT industrial powertrains.
Also know payment and next dates
Tata Motors has completed financing arrangements of up to 3.825 billion euros for this deal. The tender offer will open at 8:30 AM CEST on September 7 and close at 5:30 PM CEST on October 26. The initial payments are expected to be made on October 30.
If the necessary legal conditions are met, the re-approval period may open for five trading days between November 2 and 6. Its payment will be on 13th November. Now the biggest question in this entire deal is how much support Tata Motors is able to garner from the remaining public shareholders and whether it is able to cross the important figure of 80% and gain complete control over Iveco.
