Agnellis End Iveco Talks With China FAW as Italy Opposes
(Bloomberg) -- The billionaire Agnelli family’s CNH Industrial NV ended talks to sell its Iveco SpA truck and bus unit to China FAW Group Co. after the Italian government signaled it would oppose the deal.
CNH abandoned the talks because the Chinese automotive group didn’t present an acceptable offer for Iveco, according to person familiar with the discussions, who asked not to be named discussing confidential deliberations. Italy’s government had signaled its opposition to CNH selling to a Chinese company and later praised the decision to pull out of the talks.
Shares of CNH dropped as much as 4.7% in Milan, their biggest fall since January and the largest decline on the Stoxx 600 index. The stock is trading ex-dividend as of Monday.
“Inevitable weakness of the stock today is an opportunity to buy,” broker Equita Sim wrote in a note Monday, saying an eventual on-highway business spin-off “represents a catalyst to remove the holding discount.”
Italy’s government had been following the negotiations closely, “because it considers the production of heavy vehicles to be of strategic national interest,” Economic Development Minister Giancarlo Giorgetti said in an emailed statement Saturday. Rome is prepared to help ensure that production remains in Italy, he said.
Instead of selling the Turin, Italy-based company, CNH now plans to accelerate “deployment of ever-more sustainable transport solutions and infrastructure, in line with the EU’s Green Deal ambitions,” according to a statement Saturday. That confirmed an earlier report by Bloomberg that plans for a deal with the Chinese company had been scrapped.
The decision was also welcomed in France, with Finance Minister Bruno Le Maire noting that he and Giorgetti have worked together to protect European manufacturing.
CNH had been in talks with FAW since last year, and it rejected an initial proposal from the Chinese company valuing the business at around 3 billion euros ($3.6 billion), people with knowledge of the matter said in March. The talks were conducted amid growing opposition to Chinese ownership from leading politicians.
Prime Minister Mario Draghi said on April 8 that he backs extending state protections for businesses, after revealing that his government recently blocked a Chinese takeover of an Italian semiconductor company.
Matteo Salvini, leader of the rightist League party -- the most popular force in Draghi’s broad coalition -- said last month that the administration must protect Iveco as a strategic asset.
CNH in 2019 announced it would split off its agricultural equipment business from commercial vehicle operations, though the plan has been delayed by the pandemic. A sale of one of Europe’s most iconic truck makers could shake up the sector as well as attract domestic criticism of the Agnelli family.
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