The market promotes the separation of trucks and agricultural machinery. Next week in New York the possible announcement of the project
by Laura Galvagni
3 ‘of reading
The market promotes the Iveco spin-off hypothesis from Cnh Industrial. A few minutes before the end, the title of the conglomerate gained 4.7% to 9.3 euros. A performance linked to the fact that investors are already beginning to discount the effects on Cnh’s assessment of a possible separation from heavy vehicles. According to some estimates, like the one prepared by Banca Akros, if the company is evaluated on the operating result, the farewell to Iveco could impact up to 50% on the share price, pushing them in fact close to 13 euros. In other words, on balance, it would be about 5 billion worth that would emerge from the transaction.
Crucial, in any case, the experts stress is how the spin-off will be implemented in practice. The idea is that the operation carried out by FCA with Ferrari is essentially replicated from a technical point of view. In that case, before proceeding with the attribution of the Red titles to the Fiat shareholders, a small share of the Cavallino was listed on the market. The Italian-American group on the other hand was able to collect a bit of cash to make an impact on the debt.
Otherwise Cnh Industrial does not seem to have this need, considering that for several years it has been working to clear its exposure. This is why one could imagine a normal attribution of Iveco shares to the CNH shareholders, represented primarily by Exor which holds 26.89% of the capital. Even if, analysts point out, the perimeter of the spin-off will be the result of the fundamental maneuver. In detail, the market seems to agree that Iveco alone could have limited sustainability on the market. On the contrary, the creation of an entity that involves Iveco and Powertrain, ie the company that produces engines for heavy vehicles, agricultural and commercial, would already have a very different profile.
“We believe – the Equita analysts wrote – that this is a credible scenario given that the issue has been debated for some time. We hypothesized that Iveco could be separated together with Powertrain in order to have an entity with self-financing capacity (about 1.3 billion dollars) ยป. All to create a subject that could be worth up to 7 billion overall, of which about 4 billion referring to Iveco and 3 billion to the powertrain. In this way, the experts point out, it would create a reality that would also make industrial sense and in any case would preserve fundamental synergies. The engine part, which produces about 600 thousand units a year, sells around 150 thousand to Iveco alone and the same number to Cnh.
In fact, in this way you separate two different asset classes (as was in some respects also for Fca and Ferrari), so much so that Cnh discounts Iveco’s presence in the portfolio in the quotation to the extent that it trades on the stock exchange at multiples of half those of competitors who operate only in the agricultural machinery market, but at the same time protect synergies and generate value.