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Navistar, VW Complete Alliance, Look for Synergies

March 1, 2017
Volkswagen Truck & Buss pays $256 million for 16.6% stake in commercial truck and engine builder Coordinating procurement Collaborating on powertrain technologies Navistar expects synergies +$500 million
Together, the new partners oversee six nameplates in the commercial vehicle market: Navistar oversees the International brand commercial and military trucks, plus the IC Bus brand school and commercial buses. Volkswagen Truck

Navistar International Corp. and Volkswagen Truck & Bus finalized the equity- and technology-sharing “strategic alliance” that the two manufacturers announced last September. The deal — which centers on a VW buying 16.6% of Navistar for $256 million — includes a framework agreement for a procurement joint venture to be established by the two, as well as collaboration on product technology.

"This alliance with Volkswagen Truck & Bus marks a significant milestone in our company's history, and we expect it will create multiple benefits for both companies in both the near and long term," stated Navistar chairman, president, and CEO Troy Clarke. "Now that the transaction has closed, we will move quickly to collaborate with an industry-leading, strategic partner to increase our global scale, strengthen our competitiveness, and provide our customers with expanded access to cutting-edge products, technology and services."

VW’s investment also nets it two positions on the Navistar board of directors, to be held Andreas Renschler, CEO of Volkswagen Truck & Bus, and Matthias Gründler, CFO of the German group.

Navistar designs and manufactures International brand commercial and military trucks, IC Bus brand school and commercial buses, and proprietary diesel engines.

Volkswagen Truck & Bus designs and manufactures the MAN, Scania, Volkswagen Caminhões e Ônibus, and RIO commercial truck brands.

Navistar has stated it expects the VW alliance to be accretive to its earnings during the first year, and to achieve synergies that achieve cumulative revenues of at least $500 million over the first five years. After five years, Navistar expects the alliance will generate at least $200 million annually, and more as the companies introduce technologies based on their collaboration.

Together the partners intend to launch Global Truck & Bus Procurement LLC, to coordinate purchasing and supply-chain needs for five truck and bus brands, which their statement noted “will create new opportunities for quality improvement and cost reduction, and will enable both companies to benefit from increased global scope and scale.”

The procurement venture will operate from Navistar's headquarters in Lisle, Ill.

The partners’ technology collaboration effort is centered at Stockholm, Sweden. The goal is to foster collaboration on commercial vehicle development, specifically including advanced powertrain technologies.

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