The worldwide heavy-duty truck landscape will be changing with the pending purchase of Navistar International by Volkswagen’s Traton truck unit. Volkswagen today offered $44.50 per share for all of the remaining outstanding shares available. Before today it said its top offer was $43 per share. Volkswagen originally offered $35 per share last month.
This introduces Volkswagen’s heavy-duty truck to reach into the US. The Traton truck brand includes MAN, Scania, and Volkswagen trucks. Just as with cars, the heavy-duty truck industry is looking for ways to share costs on a number of fronts. Until now Traton had no sales in the US which is the largest truck market.
Billionaire Carl Icahn owned almost 17% of Navistar. He had a lot to do with Volkswagen upping its offer at the last minute. Today was supposed to be the deadline for Volkswagen’s original offer. Between Icahn and two investment groups; MHR Fund Management and Gabelli Funds, the three owned 40% of Navistar shares. But from all appearances, it was Icahn that was the lone holdout before the latest offer.
The $44.50 per share offer means Volkswagen will shell out $3.7 billion to acquire Navistar
The $44.50 per share offer means Volkswagen will shell out $3.7 billion to acquire all of the outstanding Navistar shares. Combining the shares Navistar owns puts the total company value at $4.4 billion. “Traton SE and the U.S.-American truck manufacturer Navistar International Corporation, in which Traton already holds a stake of 16.8 percent, have today reached an agreement in principle,” Traton said in a statement. “Traton will acquire by merger all shares in Navistar not already held by Traton, at a price of $44.50 per Navistar share.”
There is still a way to go before the deal is finalized. Due diligence, agreement of the merger terms, and executive board approval by both Navistar and Volkswagen bodies are ahead. “There is no assurance that the parties will reach agreement on definitive transaction documentation, or as to the terms thereof or that any transaction if such agreement is reached, will ultimately be consummated,” Traton said.
Shares of Navistar stock shot up almost 23% closing today at $43.52. Volkswagen’s CEO Herbert Diess has made it a priority to boost Traton’s value and reach. At Volkswagen’s annual general meeting to shareholders, he revealed that Traton would try to acquire Navistar for the reasons we wrote about earlier.
Navistar was a rebranding of International Harvester in 1986
The Navistar name was a rebranding of International Harvester in 1986. Currently, it employs 13,000 people worldwide and has 1,000 dealers. Navistar also includes Navistar Financial Corporation, which provides financing for its products. International Harvester was formed in 1902 making it older than Ford Motor Company.
It is credited with inventing what we consider the pickup truck back in 1908. International dropped its pickup and SUV models including the Scout in 1980. This was a direct result of much-needed capital after what was at the time the longest UAW strike in its history.