Volkswagen’s Truck Unit Traton Eyes Up Navistar: $2.9 Billion Takeover Bid On The Table

Volkswagen (VOW3.DE) is eyeing up commercial truck producer Navistar International (NAV) and has offered to buy all of its outstanding shares through its Traton SE (8TRA.ST) commercial vehicle business unit, adding to its 16.8% ownership of the company. Traton sells commercial trucks under the MAN, Scania, and Volkswagen brands with a significant presence in the European and South American markets.

Traton has offered $35 per share in cash – a 45% premium over Navistar’s Jan. 29 closing price of $24.11, which equates to a $2.9 billion deal. Investors have predicted that the offer from VW may go even higher, Reuters reported.

According to Traton, the transaction is the “logical next step” in the two companies’ partnership, which has allowed for greater purchasing power and technology integration. Traton partnered with Navistar in 2017 for the development of electric trucks.

“Over the past three years, we have benefitted from a highly collaborative and productive strategic alliance with Navistar,” Andreas Renschler, Traton CEO said in a statement. “As the market continues to evolve, we believe there are compelling strategic and financial benefits to a full combination of Traton and Navistar.

“The proposed transaction would create a leader in commercial vehicles with global scale and a strong portfolio of leading brands and cutting-edge products, technologies and services while delivering immediate and substantial value to Navistar stockholders.”

Though the acquisition, VW’s Traton plans on taking advantage of the two companies’ ability to meet new regulations while moving forward with connectivity, propulsion, and autonomous driving technologies. Traton also hopes to build on Navistar’s North American presence while extending its own global reach.

Navistar released its own statement about the offer, calling it “unsolicited.” The company said its board of directors “will carefully review and evaluate the proposal in the context of Navistar’s strategic plan for the company in order to determine the course of action that it believes is in the best interest of the company and its stakeholders.”

The offer is also subject to approval by the Traton and VW board of directors. Traton said if accepted, it expects the transaction with Navistar to close by the end of the year. Traton also said it will not support another transaction offer.

Shares of Volkswagen stock were down 0.60% as of 10:51 a.m. EST on Friday while shares of Traton stock were up 0.41 percent at the same time. Shares of Navistar stock were up 55.38% also at the same time.