VW moves toward possible Navistar takeover
Navistar International Corp., the truckmaker in the midst of an ambitious turnaround, may be fixing itself just in time for a takeover by Volkswagen.
Volkswagen, already just behind billionaire investor Carl Icahn among Navistar’s largest shareholders, may consider boosting its stake from 16.9 percent, according to Matthias Gruendler, the chief financial officer of the German giant’s truck and bus division. Navistar shares surged almost 10 percent.
A takeover “would theoretically be possible,” Gruendler said Monday during a press conference in Munich. He outlined a potential price tag of about “3 billion to 4 billion,” without specifying dollars or euros. While he declined to comment on a possible time frame for a deal, he said cooperation between the two manufacturers is developing “very well.”
VW began accelerating efforts to forge the world’s most profitable heavy-truck producer three years ago, when it decoupled its commercial-vehicle operations from the larger passenger-car business just before that unit’s emissions-cheating scandal emerged. It bought its Navistar stake in 2016 to gain a foothold in North America, where Daimler AG makes Freightliner vehicles and Volvo AB owns the Mack brand.
Buying out Navistar, which has a major truck plant in Springfield, Ohio, would further VW’s efforts to build scale and better compete with those rivals.
VW’s truck unit, which has already announced plans with Navistar to bring an all-electric medium duty truck to market as soon as next year, has been considering a potential initial public offering. Any purchase of Navistar could be funded by parent VW and wouldn’t depend on the offering taking place, Gruendler said.
Robert W. Baird analyst David Leiker predicts VW’s truck unit will do an IPO next year, with a possible Navistar purchase “filling a major hole” in its footprint ahead of time. VW can increase its stake to 19.9 percent before needing approval from Navistar’s board to acquire more, he said in a report to clients Monday.
“We believe a buyout is increasingly imminent,” Leiker said. “Ultimately, for VW Truck & Bus to offer a compelling investment opportunity for investors, it needs to be a global commercial vehicle OEM that can compete with the likes of Daimler Truck & Bus and Volvo Truck.”
An IPO for the truck and bus unit “is just one of the options” the division is considering to access more capital, Andreas Renschler, head of the VW truck and business, said in an interview. The unit could also sell bonds, he said.
Navistar declined to comment on VW potentially purchasing a larger stake. The companies’ year-old alliance “is already demonstrating strong progress” and is set for “continued success,” Lyndi McMillan, a company spokeswoman, said in an email.