In a letter to Navistar International Corp. on Oct. 14 Volkswagen AG’s commercial truck division, Traton SE, set a deadline for Navistar to accept its offer to acquire the U.S. truck maker.
Navistar has until Oct. 16 at 6 p.m. Central European Time to accept Traton’s “best and final” offer of $43 per share in cash for all Navistar common stock not already owned by the German-based company. If the offer is not accepted by the deadline, Traton said it would withdraw its proposal and terminate negotiations.
VW's Traton purchased its initial stake in Navistar in September 2016, laying the groundwork for a footprint in the North American market. On Jan. 30, 2020, Traton, which now holds 16.8% of Navistar stock, offered to buy the rest of Navistar for $35 per share, or $2.9 billion. In response to feedback from Navistar’s Board, on Sept. 10, Traton upped its proposal to $43 per share for all of Navistar’s outstanding shares.
Four days later, Navistar issued responded to the $3.6 billion offer with a statement from its Board of Directors regarding the revised proposal:
“Navistar's Board of Directors, after careful consideration with the assistance of its financial and legal advisors, has unanimously concluded that while Traton's revised proposal of $43 per share significantly undervalues the company and substantial synergies from a combination, it does represent a starting point for further exploring the possibility of a transaction,” the September statement read. “Traton has developed a strong strategic relationship with the company in recent years, and, in light of the 23% increase in their proposal, the Board believes 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.”
At the time, Navistar said it did “not intend to make any additional comments regarding the proposal, its engagement with Traton, or the due diligence process unless and until it is appropriate to do so, or a formal agreement has been reached.”
This week, Traton maintained that its “findings in due diligence lead us to believe that our price of $43 per share fully values the company.” In its Oct. 14 letter to Navistar, Traton said the price of $43 per share reflects “an extremely attractive premium to Navistar shareholders (a premium of 46% over Navistar’s 90-day volume-weighted average price of $29.37 as of Sept. 9, 2020, and a premium of 79% over Navistar’s unaffected price on the day before our Jan. 30, 2020 proposal).”
Navistar, which was founded at International Harvester Co. in 1902, is based in Lisle, Ill., and currently produces International commercial heavy- and medium-duty trucks, diesel engines, and IC Bus school and commercial buses.
Traton is a subsidiary of Volkswagen AG and a commercial vehicle manufacturer worldwide with its brands MAN, Scania, Volkswagen Caminhões e Ônibus, and RIO. In 2019, Traton sold around 242,000 vehicles. Traton manufactures light-duty commercial vehicles, trucks, and buses at 29 production and assembly sites in 17 countries.