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.

Leonardo has acquired Iveco Defence, an offshoot of Italian land vehicle manufacturer Iveco, in a €1.7 billion (US$1.94 billion) deal to boost its defence and security portfolio. Leonardo’s electronic systems capabilities, which includes turrets and combat sensors, will be integrated with Iveco Defence.

Leonardo has signed an agreement to acquire Iveco Defence Vehicles from the Iveco Group in a deal valued at €1.7 billion.