Italy's CNH and China's FAW in talks over truckmaker Iveco
HONG KONG/BEIJING/MILAN (Reuters) – CNH Industrial is in talks with China’s FAW over the future of truckmaker Iveco, the Italian-American group said on Wednesdy after sources told Reuters it had revived previously aborted negotiations.
A spokesman for CNH Industrial – whose new CEO, Scott W. Wine, took office this week – confirmed that the group is in preliminary discussions over its Iveco business with FAW Jiefang, declining to disclose further details.
“No final agreement around the scope or nature of cooperation has been reached at this time,” the spokesman said. “Further information in line with statutory and regulatory requirements will be disclosed in due course.”
Earlier on Wednesday sources with knowledge of the matter told Reuters that talks had been revived after being put on hold last year.
The state-owned Chinese company had made a preliminary offer that valued Iveco at a little more than 3 billion euros ($3.7 billion). CNH rebuffed the offer because it considered the valuation low, Reuters reported in September.
Milan-listed shares in CNH extended gains after news of the revived talks, rising as much as 4.5% in morning trade.
A sale of Iveco would be an alternative to CNH’s 2019 plan to split the industrial equipment and automotive group in two and list its lower-margin truck and bus business along with its FPT engine division in an effort to boost asset values and streamline its businesses.
The planned spin-off by the group controlled by Exor, the holding company of Italy’s Agnelli family, was initially targeted for early 2021 but has been delayed by the coronavirus crisis.
The latest talks on Iveco’s future come as Changchun-based FAW, which makes heavy duty trucks under its Jiefang brand, looks to expand outside China in the next couple of years, said a source familiar with Jiefang’s thinking.
FAW has made an improved takeover offer in the latest discussions and wants to acquire all of Iveco’s commercial vehicles business, including trucks and buses, as well as a minority stake in the FPT engine division, a second source said.
An investment in Iveco will help FAW’s Jiefang brand to gain access to the international commercial vehicles market, the first source added.
Iveco, the smallest of Europe’s traditional truckmakers, competes with the likes of Volkswagen, Daimler and Volvo Group. It makes vans in China with state-owned SAIC Motor.
CNH also held talks with Chinese industrial conglomerate Shandong Heavy Industry Group late last year, two sources said.
One of the sources added that Shandong Heavy Industry offered at least 3.5 billion euros but has been outbid by FAW. The source did not give a figure, saying negotiations are continuing.
Separately, Iveco is in talks to jointly develop autonomous truck technologies with Chinese startup Plus, which has a tie-up with Jiefang, one of the sources said.
Neither FAW, which has tie-ups with Volkswagen and Toyota Motor to make passenger vehicles in China, nor Shandong Heavy Industry responded to requests for comment.
All the sources declined to be identified because they were not authorised to speak to the media.
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