Volkswagen’s commercial truck unit, Traton, and Navistar, the maker of International-brand trucks, on Saturday entered into a definitive merger agreement under which Traton will become the owner of all of outstanding common shares of Navistar that it does not already own – a deal totaling $3.7 billion.
Traton previously held 16.7% of Navistar, which it acquired via a procurement joint venture and strategic technology and supply collaboration in 2016, and agreed in principle on the terms of a $44.50 per-share buyout last month.
“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 Navistar President and CEO Persio Lisboa. “We look forward to continuing to work with the Traton team to create opportunities for our employees and provide an outstanding experience for our customers and dealers through best-in-class products, services and technologies.”
Traton CEO Matthias Gründler noted the closing of the buyout, which has been on the table in some form since January, will combine Traton’s strong position in Europe and substantial presence in South America with Navistar’s complementary footprint in North America, and form a global company.
“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 Board of Management of Volkswagen AG, with responsibility 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. Together, the companies can enhance scale and reach in key markets as well as create further synergies.”
The transaction is set to close mid-next year and is subject to Navistar shareholder approval. Two major hurdles in Navistar’s approval process have already been cleared: The company’s two largest stakeholders, Icahn Capital LP and MHR Fund Management LLC, have agreed to vote their shares in favor of the transaction.