John Hitch/FO
Navistar Logo John Hitch Fo 5fac5e67ae5ef

Traton, Navistar reach definitive acquisition agreement

Nov. 12, 2020
Transaction, in which Traton will become owner of all outstanding common shares of Navistar, targeted to close at $44.50 per share mid-2021

Traton and Navistar have officially agreed that Traton will become the owner of all outstanding shares of Navistar at a cash price of $44.50 per share. Traton currently owns 16.7% of the outstanding shares of common stock of Navistar.

On Oct. 14, 2020, Traton, Volkswagen AG’s commercial truck division, set an Oct. 16 deadline for Navistar to accept its acquisition offer of $43 per share, or $3.6 billion. The following day, both companies came to an agreement of $44.50 per share, or nearly $3.7 billion, according to a statement from Navistar’s Board of Directors.

“Today’s announcement accelerates our Global Champion Strategy by expanding our reach across key truck markets worldwide, including scale and capabilities to deliver cutting-edge products, technologies, and services to our customers,” said Traton CEO Matthias Gründler in a statement. “Together, we will have an enhanced ability to meet the demands of new regulations and rapidly developing technologies in connectivity, propulsion, and autonomous driving for customers around the world."

Traton purchased its initial stake in Navistar in September 2016, laying the groundwork for a North American market footprint. On Jan. 30, 2020, Traton initially offered to buy the rest of Navistar for $35 per share, or $2.9 billion. In response to finalizing feedback from Navistar’s Board of Directors, on Sept. 10, Traton upped its proposal to $43 per share for all of Navistar’s outstanding shares. 

“This transaction builds upon our highly collaborative and successful strategic alliance and further enhances the growth trajectory of the combined company while delivering immediate and substantial value to our shareholders,” said Persio Lisboa, Navistar president and CEO, in a statement.

Navistar already had big plans for the next few years, with its Navistar 4.0 strategy in full swing and the groundbreaking over the summer of its $250 million San Antonio factory. When the plant opens in 2022, International's new electric medium-duty truck, the eMV, will be the first to roll off the line.

Funding for the cash acquisition of the outstanding Navistar shares not already owned by Traton includes financing by Volkswagen Group for the equity purchase price of about $3.7 billion. Traton stated that it remains committed to maintaining an investment grade rating. Completion of the transaction is subject to Navistar shareholder approval, customary closing conditions, as well as regulatory approvals. Major shareholders Icahn Capital LP and MHR Fund Management LLC have agreed to vote their shares in favor of the transaction.

“Volkswagen is Traton’s biggest shareholder. The agreement is thus an important milestone for Volkswagen because it underpins our strong strategic commitment to continue driving growth also during the ongoing challenging economic climate," said Gunnar Kilian, member of the Volkswagen AG Board of Management and responsible for the Truck & Bus division. "The acquisition of Navistar will significantly leverage Traton’s positioning in North America, one of the biggest and most profitable markets for heavy trucks.”

About the Author

Commercial Vehicle Staff | staff