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.