Volkswagen buys into Navistar

New deal will boost powertrain volumes and give Volkswagen access to North America

Volkswagen buys into Navistar
Navistar trucks may soon run on Volkswagen powertrains.


Volkswagen and Navistar International have come to terms on a ‘strategic alliance’, which will see Volkswagen Truck & Bus take a 16.6 per cent stake in the truck maker.

According to the German automotive giant, the new deal will see it work with the US-based truck maker on "strategic technology and supply cooperation and establish a procurement joint venture".

The 16.6 per cent stake will be bought through a primary share issuance at US$15.76 (A$20.54) per share, equalling an aggregate purchase price of close to US$256 million (A$333.69 million).

According to Volkswagen Truck & Bus CFO Matthias Gründler, the immediate part of the deal surrounds the supply of powertrain systems.

"Our collaboration, especially with regard to the powertrain, will considerably increase our synergy potential," he says.

"Navistar will be able to profit from excellent powertrain technologies and we, in turn, will benefit from significantly higher volumes.

"Initiating this strategic alliance now will enable us to implement the requirements of Navistar into our joint component platforms from the get-go."

Also in the short-term, the acquisition will assist both parties in supplier purchasing, Navistar CEO and president Troy Clarke says.

"In the near term, this alliance will benefit our purchasing operations through global scope and scale," he says.

"Over the longer term, it is intended to expand the technology options we are able to offer our customers by leveraging the best of both companies and enabling Navistar to deliver enhanced uptime.

"Volkswagen Truck & Bus's equity investment will strengthen our liquidity position and expand our financial flexibility, while aligning us with a valuable strategic partner."

Also in the longer term plans is a hope that the deal will enable collaboration in the development of future commercial vehicles.

"Closer collaboration among our existing brands was a top priority for our commercial vehicles business and we are well on track in this context," Volkswagen Truck & Bus CEO Andreas Renschler says.

"The strategic alliance with Navistar is an important milestone and will be very beneficial for both sides."

For Volkswagen, which has the MAN and Scania as part of its subsidiary stable, the deal will also provide access into the previously untried North American market.

The company is open on its goals to expand over the next decade, aiming to become the global leader in terms of "profitability, innovations for its customers and global presence."

In fact, Renschler says the latest news shows "we are now taking the next step on our way to becoming a Global Champion in the commercial vehicles industry."

The deal will see the company represented on the Navistar board of directors.

The arrival of Volkswagen will coincide with the retirement for two long-term board members at Navistar, with 14-year servant James Keyes and 20-year veteran Michael Hammes to step down at the completion of the share issuance. 

Both parties hope the deal will be finalised by the end of the year or early next year.



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