Tata Motors Seeks €1 Billion Through Equity, Stake Sale to Fund Iveco Deal

Tata Motors has announced a €3.8 billion acquisition of Italian commercial vehicle manufacturer Iveco Group N.V., excluding its defence business. The deal is expected to close by April 2026, subject to regulatory clearances across Europe and other jurisdictions. To fund the acquisition, Tata has secured a €3.8 billion bridge facility from Morgan Stanley and MUFG, and aims to raise an additional €1 billion over the next 12–18 months via equity, including monetising its 4.7% stake in Tata Capital, as per news reports.

“This transaction is being structured for long-term value creation,” said PB Balaji, Group CFO. “We expect to raise roughly a billion euros through a mix of rights issue, equity, and monetisation of our Tata Capital stake. The remainder will be serviced through debt, which we plan to repay over four years from strong free cash flows.”

Strategic Rationale and Comparative Positioning 

Balaji emphasised that Tata Motors had been working on the deal for six months, calling it a rare opportunity. “Transactions of this nature are far and few in between,” he said, “and whenever they are available, one has to move fast.” He also differentiated this move from Tata’s 2008 acquisition of Jaguar Land Rover, stating, “The portfolios sit next to each other,” unlike JLR’s distinct positioning. 

The merged entity is projected to deliver more than €21 billion (approximately ₹2.1 lakh crore) in annual revenues with a 20% return on capital employed. Iveco currently has a 6% EBIT margin owing to its high investment in R&D and next-gen technology platforms, while Tata Motors’ CV division posts a 9% EBIT, led by cost-efficient engineering from India. Balaji said, “The integration is expected to unlock synergies in capital deployment, R&D programmes, and product development, boosting long-term profitability.”

Financial Impact and Acquisition Economics

The acquisition is expected to be EPS-accretive from the second year onwards, supported by favourable deal metrics. “We’re acquiring at just 2x EBITDA, with strong support from both the Iveco board and the Italian government,” Balaji stated. 

Tata Motors aims to maintain strong free cash flow during the integration while ensuring the repayment of acquisition debt within four years. The financial structure, backed by equity and bridge financing, has been designed for long-term sustainability without compromising on operational momentum or capital efficiency.

Also Read: Tata Steel to Acquire 26% Stake in TP Adarsh for Renewable Energy Push!

Tata Motors Share Price Performance 

As of August 1, 2025, at 9:27 AM, Tata Motors share price is trading at ₹656.60 per share, reflecting a decline of 1.40%. Over the past month, the stock has declined by 3.98%.

Conclusion

Tata Motors’ €3.8 billion acquisition of Iveco marks a pivotal moment in its global CV strategy. With a complementary product mix, job assurances, and sharply defined financial and technological goals, the company is gearing up for strong and sustainable international growth.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.