Iveco Falls debuts after split to navigate truck change

(Bloomberg) – CNH Industrial NV’s truck and bus division, Iveco Group NV, fell in its first day of trading which valued the company at around 3.9 billion euros (£ 4.4 billion ), a few weeks after a similar decision by the trucks unit of Daimler AG to better cope with the profound technological changes in the industry. Bloomberg’s Most Read Iveco fell 11% to 9.99 euros per share on Monday in Milan following the CNH spin-off, after initially slightly exceeding the opening price of 11.26 per share.

Controlled by the billionaire Italian family Agnelli, CNH aims to extract more value from separate agricultural equipment brands like New Holland and utility vehicles as the industry seeks to reduce emissions. “The Iveco spin-off is based on the main idea that there are few synergies between commercial vehicles and off-road machines,” Gerrit Marx, CEO of Iveco, told reporters. Diesel-powered abandonment trends pointed in different directions for on-road and off-road companies, Marx said.

For trucks, battery-powered and hydrogen fuel cell electric powertrains are likely to dominate, while for tractors, biofuels will be the engine of the energy transition, he said. The spin-off comes after last year’s negotiations for a sale to China FAW Group Co. collapsed over price disagreements and after the Italian government said it would oppose the OK. CNH initially detailed plans for the separation in 2019.

Iveco and Daimler Truck Holding AG hope to gain momentum as stand-alone businesses in the switch to hydrogen fuel cell batteries and powertrains to comply with stricter greenhouse gas emissions regulations. The costly abandonment of improving diesel engine performance for transportation companies and offering autonomous driving features is also opening the door for new competitors like Tesla Inc. and Nikola Corp.
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Iveco has partnered with US startup Nikola to manufacture trucks at its factory in Ulm, Germany, where production was due to start for battery-electric heavy-duty vehicles late last year, followed by trucks at fuel cell at a later date. In November, Iveco also announced that it would supply Amazon.com Inc. with more than 1,000 gasoline vehicles in Europe. “The time for consolidation in our industry is over and we are looking for more partnerships like we did with Nikola,” said Marx.

Iveco is looking for a partner in the FinTech sector to create a digital platform for dealers and customers, he said. Daimler Truck, the world’s largest manufacturer of commercial vehicles, is currently valued at around 27 billion euros and has gained nearly 6% since its commercial launch on December 10. The separation of luxury car and utility vehicle maker Mercedes-Benz after a century under one roof follows divergent trends in future technology for cars and trucks, said Ola Kallenius, CEO of Daimler.

Iveco, which stands for Industrial Vehicles Corporation, was established in 1975 by parent company Fiat to serve the European truck and bus market. At that time, Iveco consisted of five brands including Fiat Veicoli Industriali, Unic and Magirus Deutz. Investors will receive one Iveco share for every five CNH ordinary shares held.

Exor NV, the family holding company Agnelli, will retain 27% of the ordinary shares and 42.5% of the voting rights. (Updates with the evolution of the share price in the first and second paragraphs) Bloomberg Businessweek Most Read

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