Defence challenge drives Iveco, rumours of a new offer
Press rumours bring the Czech group Csg back into play, which has reportedly submitted an offer that could far exceed the Leonardo-Rheinmetall consortium's proposal of around 1.5 billion.
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(Il Sole 24 Ore Radiocor) - The challenge for the conquest of Iveco Defence, with the arrival of potential new suitors, pushes the stock of Iveco Group on the Italian Stock Exchange. According to press reports, the Czech group Czechoslovak Group (Csg) has submitted a non-binding offer to the advisor Goldman Sachs for Iveco Defence Vehicles (Idv), which could greatly exceed the proposal of the Leonardo-Rheinmetall consortium (around 1.5 billion). It would therefore be the fourth bid, considering also those of the Spanish Indra and the US fund Bain Capital. But, according to other rumours, Indra would like to participate in the joint venture between Leonardo and Germany's Rheinmetall for the production of military vehicles. And there would be 'a good chance of doing so, but not before the outcome of the probable sale of Idv'. Therefore, notes Equita, it is not excluded that the Spanish group could withdraw its offer or present it jointly with the JV.
Returning to the Czech group Csg, "if an offer of over 1.5 billion would be confirmed it would be positive news," comment Intermonte analysts, who value Iveco's defence division (Idv) at 2.1 billion (7.9 euro per share). If the deal were to close at this figure, the Czech group's debt would rise to 2.5 times Ebitda (from the current 1.3), "a value that in our view is sustainable in light of a significant backlog (over €15bn including Idv)," note Intermonte, which confirms its 'Outperform' rating with a target price of €16.6. From the Golden Power perspective, analysts believe that "the transaction has a chance of being approved", considering that "Csg operates 61% with NATO countries, 33% with Ukraine and 6% with other countries including India, Indonesia and the United Arab Emirates".
While remaining of the idea that Leonardo's offer remains in 'pole position for political-industrial reasons', in the event of significantly higher value offers, 'we do not exclude that the decision could be different', add the Equita analysts, who assign a 'Buy' recommendation with a target price of 18.5 euro. Csg operates in the military sector producing defence systems, vehicles, ammunition, train components and air traffic control systems. The land defence systems business (such as military vehicles) accounts for about 12% of the total with revenues of EUR 653 million.
