MILAN, Jan. 6 (Class Editori) -- CNH Industrial confirms it has restarted negotiations to sell the majority of the Italian trucks group, Iveco, to the Chinese car manufacturer FAW. News has been anticipated this morning to the Reuters agency by sources aware of the situation. Negotiations stopped last year after the Chinese company submitted a preliminary offer in July, appraising Iveco at little more than 3 billion euros. CNH rejected it because it was considered too low.
Now FAW, which is based in Changchun and produces heavy trucks with its brand Jiefang and aims at expanding out of China in the next two years, made a better offer and wants to buy all Iveco's commercial vehicle activities, including trucks and buses, as well as a minority share of its FPT engine division, a source stated to Reuters. An investment that will help the brand Jiefang to enter the international commercial vehicle market. A spokesman of CNH Industrial - whose new CEO Scott W. Wine took office this week - confirmed that the group is pre-negotiating with FAW for Iveco without, though, revealing further details.
According to two of the sources mentioned by Reuters, CNH - controlled by Exor, the Agnelli family holding - started negotiating also with the Chinese industrial group Shandong Heavy Industry Group late last year. The latter would have offered at least 3.5 billion euros but it has been outdone by the FAW relaunch. Separately, Iveco is negotiating to jointly develop technologies for autonomous trucks with the Chinese startup Plus, which has connections with Jiefang, stated one of the sources.
A sale by Iveco would be an alternative to the plan established by CNH Industrial in 2019 to split in two and list its trucks and bus activity, together with FPT, in the attempt to increase the group value and rationalize its activities. The spin-off, originally scheduled for the beginning of 2021, has been delayed due to the coronavirus crisis. Iveco, the smallest European trucks producer, competes with important companies such as Volkswagen, Daimler and Volvo Group. It produces vans in China with Saic Motor, a state-owned company.
As a result of the news, CNH Industrial stock heads the maximum intraday on Stock exchange to 10.63 euros (+3.10 percent), also due to the great opportunity for Iveco Defence Vehicles in Brazil, since the country's army started a process to select up to 221 armored vehicles. Akros Bank stated that the vehicle "Centauro II" built by Leonardo and Iveco/CNH Industrial through their 50 percent-50 percent joint venture has some features that would increase the chances of success. For the investment bank, this is potentially positive and non-obvious news for CNH Industrial on which it has a rating buy and a target price at 12.5 euros.
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