Tata Motors Shares Slide as $4.5 Billion Iveco Deal Raises Red Flags

Tata Motors shares nosedived nearly 4% to Rs.665.45 on the BSE after news broke of a massive $4.5 billion bid to acquire Italy's truck-maker Iveco. The proposed deal, if finalized, would be the company’s largest-ever acquisition—surpassing even its high-profile purchase of Jaguar Land Rover in 2008.

According to reports, board meetings between Tata Motors and Iveco are underway to approve the deal. Once cleared, this would mark the Tata Group's second-largest acquisition after the Corus deal, raising concerns that Tata might be overextending itself.

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Market experts are sounding alarm bells. “This is a risky time for such a large investment,” said Dr. Nitin Balwani from NMIMS. "Tata Motors is already facing high costs due to Jaguar’s EV transition, hefty tariff impacts in premium markets, and the need for a Rs.3.8 billion GBP investment by FY26 to comply with EURO VI norms."

Dr. Balwani warns that with cash flows under pressure, the company may be forced to raise debt, which could further weaken its balance sheet. Global brokerage firm UBS echoed similar concerns, maintaining a ‘Sell’ rating with a target of ₹690 and estimating over €1.5 billion in additional outflows from the mandatory open offer.

Deal Structure and Market Share Insights

Under the deal structure, Tata Motors would initially acquire 27.1% from Exor—the Agnelli family’s investment arm—and then extend a tender offer to minority shareholders. Exor holds 43.1% of the company’s voting rights. Tata Motors aims to acquire 100% of Iveco’s listed business, excluding its defence arm, which is being demerged.

According to JPMorgan, Iveco generates 70% of its industrial revenue from trucks, with buses and powertrains contributing 15% each. In 2024, the brand held a 13.3% share in the Light Commercial Vehicle segment and 8–9% in the Medium and Heavy segment.

Mounting Pressure on Tata Motors

This acquisition gamble comes at a time when Tata Motors is already battling on multiple fronts—from electrifying its luxury Jaguar brand to staying compliant with increasingly strict environmental regulations. Investors worry that this aggressive push might do more harm than good.

Tata Motors shares have already lost 42% of their value in the past year, highlighting how fragile investor sentiment is. The big question now: can the company balance ambition with financial prudence?

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