According to a Reuters report on January 6, CNH Industrial has resumed talks to sell a majority stake in Italian Truck Group to the group.
FAW Group made two bids to acquire IVECO’s commercial vehicle business
July 2019FAW Group had made a preliminary offer valuing IVECO’s commercial vehicle business at just over 3 billion euros (about 23.95 billion yuan). CNH rejected the proposal, Reuters reported in September.It is believed that the valuation submitted is low.
According to people familiar with the matter, the resumption of talks is due to FAW Group’s better offer and its desire to acquire all of IVECO’s commercial vehicle businesses, including trucks, buses, and a minority stake in the FPT division.
● IVECO’s commercial vehicle business has low profit margins, and the parent company plans to split the business
CNH’s agriculture and construction business generated $15.60 billion in sales in 2018, compared with $13.10 billion in revenue from its so-called "road" business. The group’s most profitable businesses are agricultural equipment and powertrains, both of which have margins of 8.9%, compared with just 2.7% for commercial vehicles.
Therefore, CNH Industries plans to spin off the company’s business in 2019, create a company that operates agricultural and construction brands, and establish a separate department to manageThe less profitable Iveco Trucks and Buses business and FPT Power Technologies are designed to increase the Group’s asset value and simplify operations…
The original spin-off plan was originally scheduled to be completed in early 2021, and the sale of Iveco was also an option, but due to the impact of the epidemic, the above plan has been postponed to 2021 or even later. As the epidemic intensifies abroad, the possibility of selling Iveco also increases.
● Afterword
The negotiations come as FAW seeks to expand overseas in the coming years. The acquisition of Iveco will help the brand enter the international commercial vehicle market and help improve the technology of commercial vehicles in China. However, all the information at present cannot be confirmed, and the specific situation is subject to the announcements of the participating parties. (Wen/Zhong Danjun)