A merger more than five years in the making will finally be consummated Thursday when Navistar International Corp. becomes part of Volkswagen AG’s TRATON SE truck holding company.
As the ownership changes, Navistar is expected to keep its name and executive structure, albeit reporting to TRATON CEO Mattias Gruendler.
All regulatory approvals needed to go ahead with the merger have been received, Navistar said Wednesday. TRATON made an unsolicited $2.9 billion bid for Navistar in January 2020. The pandemic slowed negotiations until last fall when TRATON twice upped its offer, finally agreeing to pay $3.7 billion in cash.
Navistar (NYSE: NAV) stock has traded in a narrow range, rising and falling only pennies since shareholders approved the buyout. Navistar will be delisted following the merger and is expected to trade as part of TRATON (OTC: TRAFT), which owns Sweden’s Scania and Germany’s MAN truck manufacturers as well as Volkswagen’s Brazilian truck subsidiary.
First move in 2016
Navistar’s shareholders on March 2 approved the sale of about 83% of the company that TRATON did not already own for $44.50 a share. Volkswagen Truck & Bus, the predecessor to TRATON, purchased 16.6% of Navistar shares for $256 million in September 2016.
From that time, rumors swirled that VW, which spun off its heavy-duty truck businesses as TRATON SE in 2019, would make a play to purchase all of Navistar. It was blocked from acquiring a bigger stake in Navistar. Its only option was to purchase all outstanding shares, including a 17% stake held by billionaire investor Carl Icahn.
Navistar is the smallest of the major truck manufacturers operating in the U.S. It nearly collapsed under the weight of an engine emissions defect in the last decade. The company recovered with the leadership of Executive Chairman Troy Clarke, who became CEO in 2013. Clarke stepped down as chairman, CEO and president in April when it appeared the merger would proceed.
Clarke’s relationship with former TRATON CEO Andreas Renschler paved the way for the combination that solidifies Navistar’s future. Competitors Daimler Truck, Volvo Group and PACCAR Inc. all have stronger financial footing.
Greater access to capital
With TRATON as its parent, Navistar has greater access to capital as trucking moves toward more electrification and autonomous driving operations. Navistar already has a working relationship in purchasing and powertrain manufacturing with TRATON.
“I know, we’re excited about it,” William “Rusty” Rush, CEO of Rush Enterprises, the nation’s largest network of new truck dealerships, said during a call with analysts in April. “That new ownership that’s coming on board will give the Navistar group [the ability] to continue to forge down the path they’ve already been [on] but maybe even accelerate into the future.”
For TRATON, the merger opens the door to the North American market, which Renschler has said was a key to TRATON becoming a “global champion” in heavy-duty transportation.
The Navistar-TRATON merger is one of two events reshaping the industry this year. Daimler Truck AG expects to separate from Daimler AG before the end of the year, creating a stand-alone global trucking manufacturer.