Directors of Navistar International Corp. rejected an estimated $3.6-billion takeover offer by Traton, the commercial truck-building subsidiary of Volkswagen AG, but indicated their willingness to consider future proposals.
Traton already holds 16.7% of Navistar, the manufacturer of International brand commercial trucks and diesel engines, and the offer was a 23% increase over a $2.9-billion bid it offered in January of this year. It has made clear it aims to be the sole shareholder of Navistar.
But, the $43.00/share offer share "significantly undervalues the company and substantial synergies from a combination," the board stated in a release, but "it does represent a starting point for further exploring the possibility of a transaction."
Navistar's largest shareholder is financier Carl Icahn, with 16.9%, and that stake along with two other activist shareholder funds comprise 40% of the Navistar shares.
VW formed Traton SE, or Traton Group, as the portfolio company for its MAN, Scania, and Volkswagen Caminhões e Ônibus brands, and the RIO digital services program. Traton sold a reported 242,000 light-, medium-, and heavy-duty trucks, as well as vans and buses during 2019, and has about 83,000 employees worldwide.
In addition to trucks and diesel engines, Navistar produces military vehicles through its Navistar Defense subsidiary, and buses through the IC Bus unit. It reported 2019 deliveries of 106,500 units, and it has about 12,000 employees.
Traton and Navistar have been in a partnership since 2016, including forming a purchasing alliance and developing the Navistar’s A26 12.4-liter engine, based on MAN AG's D26 engine. Navistar directors' statement proposed the best way for Traton to appreciate "the true value of a potential combination is to allow it to conduct due diligence and engage in further synergy discussions with the company.”
