Italy's CNH revives Iveco sale talks with Chinese automaker FAW

HONG KONG/BEIJING/MILAN: CNH Industrial has revived talks to sell the bulk of Italian truck group Iveco to Chinese automaker FAW Group, three people with knowledge of the matter told Reuters.

Discussions were put on hold last year after the state-owned Chinese company had made a preliminary offer in July, valuing Iveco at a little more than 3 billion euros ($3.7 billion). CNH rebuffed the offer because it considered the valuation low, Reuters reported in September.

The latest talks come as Changchun-based FAW, which makes heavy duty trucks under its Jiefang brand, looks to expand outside China in the next couple of years, said one of the sources familiar with Jiefang's thinking.

FAW has made an improved offer in the latest discussions and wants to acquire all of Iveco's commercial vehicles business, including trucks and buses, as well as a minority stake in its FPT engine division, a second source said.

An investment in Iveco will help FAW's Jiefang brand to gain access to the international commercial vehicles market, the first source added.

CNH, which is controlled by Exor, the holding company of Italy's Agnelli family, also held talks with Chinese industrial conglomerate Shandong Heavy Industry Group late last year, said two of the sources.

A spokesman for CNH Industrial - whose new CEO, Scott W. Wine, took office this week - confirmed that the group is in preliminary discussions with FAW Jiefang over its Iveco business without disclosing further details.

RIVAL BIDS

One of the sources added that Shandong Heavy Industry offered at least 3.5 billion euros but has been outbid by FAW. The source did not give a figure, saying negotiations are continuing.

Separately, Iveco is in talks to jointly develop autonomous truck technologies with Chinese startup Plus, which has a tie-up with Jiefang, one of the sources said.

A sale of Iveco would be an alternative to a plan set by vehicle and equipment maker CNH Industrial in 2019 to split into two and list its lower-margin truck and bus business, along with FPT, in an effort to boost the group's asset values and streamline its businesses.

The planned spin-off, initially targeted for early 2021, has been delayed because of the coronavirus crisis.

Neither FAW, which has tie-ups with Volkswagen AG and Toyota Motor to make passenger vehicles in China, nor Shandong Heavy Industry responded to requests for comment.

All the sources declined to be identified because they were not authorised to speak to media.

Iveco, the smallest of Europe's traditional truckmakers, competes with the likes of Volkswagen AG, Daimler and Volvo Group. It makes vans in China with state-owned SAIC Motor.