CNH Industrial Weighs Options for Iveco Truck Unit
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CNH Industrial NV, the tractor maker backed by Italy’s billionaire Agnelli family, is evaluating options for its Iveco truck business as it seeks ways to unlock value, people familiar with the matter said.
The company is weighing possibilities including spinning off the Iveco division or combining it with a competitor, according to the people, who asked not to be identified because the information is private. It could announce a strategic review of the business as soon as next week, when the company is holding an investor meeting, the people said.
CNH, which was once part of carmaker Fiat Chrysler Automobiles NV, makes farm equipment under brands like Case and New Holland. The possibility of separating the truck business from the company’s more profitable tractor division has long been mooted, with then-CEO Richard Tobin saying last year he would consider spinning off Iveco after further strengthening CNH’s balance sheet.
No final decisions have been made, and there’s no certainty the deliberations will lead to a transaction, the people said. A representative for CNH declined to comment.
CNH’s agricultural business, by far its biggest unit, boasts profit margins that are more than triple those of the trucks operation. The overall company’s valuation also trails its peers in the farm machinery industry, trading at an enterprise value of 5.8 times this year’s estimated earnings before interest, tax, depreciation and amortization. Deere & Co., which only makes agricultural equipment, trades at a multiple of 11.7 times, data compiled by Bloomberg show.
Tobin was a close aide of Fiat Chrysler’s former CEO, the late Sergio Marchionne, who long championed separating businesses to help drive more value for shareholders. The strategy increased the value of the Fiat empire more than tenfold during his tenure, helped by spinoffs of Fiat Industrial SpA, which later became CNH, and super-car maker Ferrari NV.
Tobin left CNH in April and has since become CEO of U.S. industrial manufacturer Dover Corp. He was succeeded by Hubertus Muehlhaeuser, a former vice president of AGCO Corp. and CEO of Welbilt Inc.
The new CEO said at an annual shareholder meeting in April the company was “doing a portfolio review of its assets but considers all business core.”
