Iveco Falls on Debut After Split to Navigate Truck Shift

(Bloomberg) -- CNH Industrial NV’s truck and bus division Iveco Group NV declined during its first day of trading that valued the company at about 3.9 billion euros ($4.4 billion), weeks after a similar move by Daimler AG’s truck unit to better face the industry’s deep technology shifts. 

Iveco slumped as much as 11% to 9.99 euros a share Monday in Milan following the spinoff from CNH, after initially rising slightly above the opening price of 11.26 a share. Controlled by Italy’s billionaire Agnelli family, CNH aims to extract more value from separated agricultural equipment brands like New Holland and commercial vehicles as the sector seeks to cut emissions. 

“The Iveco spinoff relies on the main idea that there are little synergies between commercial vehicles and off-road machines,” Iveco Chief Executive Officer Gerrit Marx told reporters. The trends in switching away from diesel engines were pointing in different directions for highway and off-highway businesses, Marx said. 

For trucks, battery-electric and hydrogen fuel-cell powertrains will likely dominate while for tractors biofuels will drive the energy transition, he said.

The spinoff comes after talks last year for a sale to China FAW Group Co. fell apart because of disagreements over price and after the Italian government signaled it would oppose the deal. CNH initially detailed plans for the separation in 2019. 

Both Iveco and Daimler Truck Holding AG are hoping to gain speed as standalone companies in the switch to batteries and hydrogen fuel-cell powertrains to meet tightening regulation on greenhouse gas emissions. The costly shift away from eking out better diesel-engine performance for haulage companies and offering autonomous driving features is also opening the door to new competitors like Tesla Inc. and Nikola Corp. 

Iveco has partnered with U.S. startup Nikola to make trucks at its plant in Ulm, Germany, where production was scheduled to get underway for battery-electric heavy-duty vehicles late last year, followed by fuel-cell trucks at a later date. In November, Iveco also announced it will supply Amazon.com Inc. with more than 1,000 gas-powered vehicles in Europe. 

“Time for consolidation in our industry is over and we are looking more for partnerships like we did with Nikola,” said Marx. Iveco is looking for a partner in the financial-technology industry to build a digital platform for dealers and customers, he said. 

Daimler Truck, the world’s biggest commercial vehicle maker, is currently valued at about 27 billion euros and has gained nearly 6% since its trading start on Dec. 10. The separation of the maker of Mercedes-Benz luxury cars and commercial vehicles after a century under the same roof follows the divergent trends in future technology for both autos and trucks, Daimler CEO Ola Kallenius has said. 

Iveco, which stands for Industrial Vehicles Corporation, was formed in 1975 from parent Fiat to serve the European truck and bus market. At that time Iveco included five brands including Fiat Veicoli Industriali, Unic and Magirus Deutz. Investors will receive one Iveco share for every five CNH common shares held. Exor NV, the Agnelli family holding company, will retain 27% of common shares and 42.5% of voting rights. 

(Updates with share price move in first and second paragraph)

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