IVECO Defense
Potential purchasers are preparing to acquire Iveco Defence Vehicles, Italy’s largest military vehicle manufacturer, and the Italian government may find it challenging to prevent its sale abroad, a source informed Defence News Today.
The Italian army’s primary combat vehicle supplier might withdraw from its parent company, Iveco, by the year’s end.
Iveco is owned by the Exor Group, the largest shareholder in automobile manufacturer Stellantis, which is controlled by the Italian Agnelli family. Iveco announced on May 15 that it would divest IDV this year, paving the way for a potential sale.
“The spin-off will commence by year-end, and in the interim, we will assess offers to acquire the firm,” a spokesperson stated. “We have received initial proposals from several strategic entities,” stated CFO Anna Tanganelli.
Last year, IDV experienced a revenue increase of 15% to €1.1 billion ($1.3 billion) due to the global escalation of land-warfare budgets in response to the Ukraine conflict.
To date, one firm has publicly expressed its interest. On May 8, Roberto Cingolani, CEO of the Italian defense conglomerate Leonardo, announced that the company had submitted a joint proposal with Germany’s Rheinmetall.
Leonardo and Rheinmetall
Leonardo and Rheinmetall have established a joint venture, announced last year, to manufacture 1,050 new infantry fighting vehicles for the Italian army, utilising the Rheinmetall Lynx design, as well as 132 tanks based on the underdeveloped Panther KF51.
IDV also possesses a portion of the substantial Italian vehicle contract. In December, it announced the signing of an agreement with Leonardo to undertake 12–15% of the development and production responsibilities for a contract valued at €23 billion.
Leonardo and IDV previously established a long-term joint venture, named CIO, which manufactures VBM wheeled combat vehicles and wheeled Centauro tanks for the Italian army.
An industrial source indicated that Leonardo proposed to acquire IDV for €750 million last year but was rejected. “They could have acquired it had they proposed a billion, but they did not,” stated the source.
Italy seems unwilling to sell Iveco defense Vehicles (IDV) to India, despite growing global interest in the company. The hesitation comes from fears over national security and IDV’s strong ties with the Italian Army and Leonardo.
India hopes to boost its armoured vehicle tech and home production through potential deals like this one. Italy, however, prefers keeping IDV under European or national control to preserve strategic independence.
The Italian government is cautious about losing a key defense asset as EU military cooperation becomes more important. Global players are lining up to bid for IDV, highlighting its increasing value and strategic importance.
Indra may offer €1 billion
Spanish media reports that Indra may offer €1 billion to acquire IDV from Exor. U.S. investment firms and France-Germany’s KNDS group are also reportedly interested in the company. Following its latest partnership with IDV, BAE Systems emerges as a formidable contender. BAE and IDV plan to produce BvS10 vehicles in Italy for the Italian Army, strengthening local industrial ties.
IVECO Defense Product Line
BAE manufactures amphibious vehicles in collaboration with IDV for the U.S. Marines. The industrial source suggested that IDV’s connections with the Italian military and Leonardo could potentially cause reluctance when selling to a foreign buyer. A source, speaking anonymously to address internal discussions, stated, “The Italian army and government officials prefer IDV to remain Italian.”
Conclusion
Cingolani hinted Leonardo may avoid overpaying just to keep IDV under Italian ownership. Exor, meanwhile, wants top profit from the sale, as IDV is currently performing well. Foreign companies, especially outside Europe, are showing more interest as the EU ramps up defense spending.
The Italian media urges the government to use its ‘Golden Power’ law to block the sale of key firms. This law lets Rome stop or regulate the sale of strategic companies to protect national security interests. An Italian legal expert indicated that it may not be relevant in the context of IDV.
Authorities typically use the law to set conditions for new buyers, like during GE’s purchase of Italy’s Avio Aero. They can also block deals if the buyer is considered a potential threat to national interests.
An anonymous source explained, “They’ve never used it to eliminate one or more bidders from the start.” Given its controlling stake in Leonardo, could the Italian government legally contest its potential obstruction of a sale to Indra as market interference? The source stated, “Indra is not China.”
