The dealbook for Volkswagen AG’s (U.S. OTC: VLKAF) proposed initial public offering (IPO) of Traton SE (formerly Volkswagen Truck & Bus AG) appears to be lower than anticipated according to sources cited by Reuters.
On May 14, Volkswagen AG announced plans to take its heavy-truck division, Traton, public by summer 2019. While the IPO appears to remain on course, it may price at a lower valuation than initially anticipated.
According to sources cited by Reuters, the deal volume hasn’t been finalized, but Volkswagen may float 10 percent to 15 percent of the division for a value in excess of 2 billion euros, valuing the total entity roughly around 15 billion euros.
This is well shy of prior estimates in which Bloomberg Intelligence placed a 25 billion euro valuation on Traton and in which Traton’s own Chief Executive Officer Andreas Renschler previously spoke of selling one-quarter of the company for more than 6 billion euros.
Traton includes the MAN, Scania and Volkswagen truck brands. The company is the market leader in its core markets of Europe and Brazil. In 2018 it posted 13.7 percent growth in truck sales to 233,000 units.
The proceeds from the sale of equity in Traton are part of Volkswagen’s restructuring effort, which is aimed at increasing the company’s valuation. Volkswagen is restructuring assets and mentioned that it is evaluating the sale or restructuring of other businesses at its mid-May annual general meeting. Further, the company is making a push in battery cell production as it attempts to achieve its goal of three million electronic vehicle sales by 2025.
Citing market uncertainty, Volkswagen pulled the planned Traton IPO earlier in 2019.
Volkswagen, through its wholly owned Traton subsidiary, owns approximately 16.6 million shares, or 16.8 percent of Navistar (NYSE: NAV). The strategic alliance between the two companies provides joint collaboration on engine technology, the sale of engines and contract manufacturing.
Renschler previously mentioned that the company had no plans to change its stake in NAV.