International to acquire Workhorse Custom Chassis

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Navistar International Corp. announced July 5 that its operating company, International Truck and Engine Corp., has entered into an agreement to acquire Workhorse Custom Chassis, a manufacturer of chassis for motor homes and commercial step-van vehicles.

Terms of the all-cash deal were not disclosed. The acquisition agreement was signed July 1 and will be completed over the next 60 to 90 days. The acquisition is expected to close in Navistar’s fiscal 2005 fourth quarter.

Workhorse sells gas RV chassis and Class 3-6 step-vans, having produced more than 18,000 chassis in 2004. The proposed acquisition also includes Uptime Parts, a parts distribution network that supplies commercial fleets and RV dealers.

Daniel C. Ustian, chairman, president and chief executive officer of Warrenville, Ill.-based Navistar, says the acquisition will enable International to become a major player in the growing Class A RV chassis market, and provide the opportunity to grow its diesel engine and parts sales.

International says the RV industry is forecast to grow three to five percent over each of the next five years, due in part to the growing popularity of motor homes among baby boomers. Sales of Class A units last year exceeded 40,000. Step-van sales range from 8,000 to 12,000 units per year and are expected to continue to grow as the result of increased home shopping and e-commerce by consumers, according to International.

Ustian noted that the commonality between International’s product line and the commercial and RV chassis produced at Workhorse will result in potential significant purchasing synergies for Workhorse. In addition, a critical segment of the motor home market is the diesel rear-engine chassis, which today represents less than 50 percent of the market.

According to Workhorse, acquisition discussions grew out of its desire to integrate International’s VT275 V6 diesel engine for Workhorse’s W42 commercial chassis for walk-in trucks.

“International’s diesel competencies and engine portfolio provide great opportunities for expansion of the Workhorse products into these segments of the market, and the first step in that process will be the planned introduction of the International VT275 V6 engine in a Workhorse commercial chassis later in 2005,” Ustian said.

Workhorse’s manufacturing operations are carried out at a 209,000-square-foot facility in Union City, Ind. The parts business is headquartered in West Chicago, Ill., with support facilities in Reno, Nev. and Fremont, Calif. The affiliated companies currently have more than 500 employees.

“With International’s backing, Workhorse will have new opportunities to improve our cost structure and parts and service capabilities,” said Dave Olsen, president, Workhorse Custom Chassis.