Daimler starts engine on truck M&A monster mashup

A new Daimler AG, FUSO battery-powered eCanter urban delivery truck is unveiled during a news conference in New York City, U.S. September 14, 2017.

LONDON, Nov 11 (Reuters Breakingviews) - Daimler’s (DAIGn.DE) truck unit is nosing ahead of Italian rival Iveco in the race to market. The German automaker set punchy targets for its industrial vehicle division on Thursday, just weeks before it lists a majority stake. Daimler wants a 10% operating profit margin by 2025, a big jump from 7% in the first half of 2021. Iveco, controlled by the Agnelli family-backed CNH Industrial (CNHI.MI), looks a bit more clunky, with a 3.6% EBIT margin in the first half, according to its prospectus, also filed on Thursday.

The spinoffs will create two large listed European truck makers, alongside Sweden’s Volvo (VOLVb.ST) and Volkswagen’s (VOWG_p.DE) Traton (8TRA.DE). Assume Daimler’s sales recover to 2019 levels next year and it retains its 7% margin. On an 8 times multiple, it would be worth 26 billion euros, nearly a third of its parent’s 95 billion euro market capitalisation. Yet truck makers are also consolidating to prepare for the switch to electric vehicles. Traton recently snapped up Navistar; CNH tried to sell Iveco to China’s FAW Jiefang. Listings will rev up the dealmaking. (By Neil Unmack)

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