Iveco Group NV agreed to sell its defense unit to Leonardo SpA for an enterprise value of €1.7 billion ($1.95 billion), in a step toward a planned breakup of the maker of commercial trucks and military vehicles.

Prime Minister Giorgia Meloni's government has privately signaled it would back the proposed transaction as long as Iveco's strategically important defense unit is sold to a group led by Leonardo

Iveco Group NV is close to selling its defense unit to Italy's Leonardo SpA and its commercial vehicle segment to India’s Tata Motors. The move supports Italy’s preference for local control of defense assets and would boost Tata’s European footprint in commercial mobility.