Exclusive-CNH to include defence business in spin-off plan -source

By Giulio Piovaccari

MILAN (Reuters) -CNH Industrial is set to include its defence and special vehicle businesses in a plan to spin-off assets to speed up the process after delays due to the COVID-19 crisis, a source told Reuters on Wednesday.

CNH Industrial, which is controlled by Exor, the holding company of Italy's Agnelli family, declined to comment.

The industrial equipment and automotive group said in 2019 it planned to split into two and separately list its lower-margin Iveco truck and bus business along with its FPT engine division to boost asset values and streamline its businesses.

As part of this plan, the defence and special vehicle businesses were originally going to remain within CNH Industrial, along with its agriculture and construction units.

The plan was due to be completed in early 2021, but it has been delayed by the COVID-19 pandemic.

The group does not provide separate sales figures for its defence and special vehicle businesses, but some analysts estimate their combined sales amount to around 8% of CNH's total revenues, which stood at $26 billion last year.

Exor had pledged to remain "the shareholder of reference" in both companies, following the completion of the spin-off process.

CNH however has held talks with China's FAW Jiefang over a possible sale of Iveco, the smallest of Europe's traditional truckmakers, which competes with the likes of Volkswagen, Daimler and Volvo Group.

But talks collapsed earlier this month due to disagreement over the assets' valuation and amid fears that the Italian government could stop the deal.

CNH, with a market capitalisation of around 17.5 billion euros ($21.1 billion), said it was now continuing to pursue its plan to spin-off its truck, bus and engine businesses, aiming to complete it in early 2022.

Keeping the defence and special vehicles in the truck division would simplify the spin-off process and speed it up, helping the group to meet its deadline. The special vehicles include Astra heavy duty trucks used in quarries and Magirus fire fighting vehicles.

"They have been part of Iveco for decades," the source said. "The two companies resulting from the spin-off would also be more homogeneous."

Iveco's defence business produces armoured vehicles based on the group's special vehicles.

The source also said CNH was planning to keep the defence business as a separate company within the group to be spun off.

This would make it easier to strip it out if, in the future, there were to be a bid for the whole truck business after its spin-off, the source said.

($1 = 0.8280 euros)

(Reporting by Giulio Piovaccari. Editing by Giulia Segreti and Jane Merriman)