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Informist, Thursday, Jul. 31, 2025

By Narayana Krishna and Kabir Sharma

HYDERABAD/MUMBAI – Tata Motors Ltd. plans to raise up to 1 billion euros in the next 18 months to fund its proposed acquisition of Italian heavy vehicle manufacturer Iveco Group, the former's management said at a press conference on Thursday. Late on Wednesday, Tata Motors had said it would fully acquire Iveco Group N.V. for 3.8 billion euros ($4.3 billion), excluding Iveco's defence business.

The company expects to complete the transaction by April. Tata Motors said Morgan Stanley and Mitsubishi UFJ Financial Group, known as MUFG, will provide 3.8 billion euros as bridge finance to fund the Iveco transaction. The facility is expected to be syndicated and then termed out with a mix of equity and long-term debt over 12 months from the closure of the transaction, Tata Motors said. The company was in talks with Iveco's management on the acquisition plans and finally concluded the deal on Wednesday, it said.  

"We will have to fund it sometime in April next year. That is when the bridge loan actually gets drawn down. Thereafter, it will take about 12 months to actually do a fund raise of equity and also term out the bridge loan, because the bridge loan has to be termed out," Tata Motors said. "Obviously, this requires extensive conversation with the rating agencies as well, and that is something that after this call later in the day, we're anyway engaging with them."

Tata Motors said debt isn't an issue as the company is sitting in its strongest ever position financially. Tata Motors expects to repay the debt related to the acquisition in four years.

The company expects the Iveco business to achieve scale of 17.5 billion euros at a compounded annual growth rate of 5% by 2028, and sees its margins at around 7.0% to 7.5%.

The Iveco acquisition comes at a time when Tata Motors is set to demerge its commercial vehicles operations into a separate entity. When asked about the rationale of further increasing debt in the commercial vehicles segment, Tata Motors said listing of the commercial vehicles business would be on Oct. 1 and the Iveco acquisition would be completed after that in April. Except 1 billion euros of debt, the company will fund the remaining portion of the acquisition through free cash flows, the management said. Tata Motors said the Iveco acquisition was a growth-led transaction and would not have any negative impact on the company at the consolidated level.

Tata Motors said integration of Iveco wasn't an issue as the company has gained significant experience in cross-culture mergers in the past through deals such as JLR and Daewoo. Explaining the rationale of the acquisition, Tata Motors said the Iveco buyout would complement revenue growth on both sides, and help avoid duplicating investments, including avoiding overlap of investments in areas like research and development. This would help deliver better value going forward, the company said.

Post integration, the company expects to launch some of the vehicles made by Iveco in India and some other markets in which Tata Motors is currently present. The company is seeking to launch Iveco's buses, tippers and trucks in Latin America and some other regions.

At 1445 IST, shares of Tata Motors were at INR 667.65 on the National Stock Exchange, down 0.1% from the previous close.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta

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