Tata Motors is currently in the process of securing a €3.875bn ($4.5bn) bridge loan to fund its planned acquisition of the commercial vehicle (CV) division of Iveco Group. This acquisition is anticipated to be one of the most significant transactions in Asia this year, according to sources cited by Bloomberg.
The loan, which has a 12-month term, is supported by a letter of backing from Tata Group’s investment holding company, Tata Sons. The financing agreement includes an interest rate margin of 102.5 basis points above the Euribor benchmark.
Underwriters for the loan are reported to be Mitsubishi UFJ Financial Group, Morgan Stanley, and Morgan Stanley Senior Funding. Tata Motors has not yet commented on the loan.
This move reflects a growing trend of utilizing loans to facilitate cross-border mergers and acquisitions originating from the Asia Pacific region. If the acquisition goes through, Tata Motors is expected to expand its presence in the European CV sector, following its acquisition of Jaguar Land Rover in 2008.
In July, Tata Motors signed a deal to acquire Iveco’s commercial vehicle business in an all-cash voluntary tender offer, excluding Iveco’s defense segment. The bridge loan is expected to be refinanced through a combination of equity and long-term debt within 12 to 18 months.
The completion of the takeover is projected to take place by April 2026, subject to regulatory approvals. The Iveco Group consists of seven brands offering a range of products including CVs, buses, powertrains, specialty vehicles, and financial services.
In other news, Iveco Bus recently inaugurated a new prototype and testing center in the Czech Republic.
As Tata Motors moves forward with this significant acquisition, the company stands to strengthen its position in the global CV market and enhance its portfolio of offerings. The completion of the deal will mark a significant milestone for Tata Motors and pave the way for further growth and expansion in the industry.
