Seven months after TRATON SE (ETR: 8TRA) offered $2.9 billion offer to acquire the rest of Navistar International Corp. (NYSE: NAV) the on-again, off-again merger talks may be heating up, according to a Bloomberg report.
TRATON is the truck holding company of German automaker Volkswagen AG. It owns about 16.7% of Navistar, which builds International-brand trucks, school buses, defense vehicles and engines.
On Jan. 30, TRATON offered $35 a share in cash for the rest of Navistar shares. But it may not be enough. Navistar’s shares rose 5.63% on Thursday, closing at $35.28.
Representatives for VW and Traton declined to comment to Bloomberg. Navistar could not be immediately reached.
The global coronavirus pandemic hit both companies’ revenues and profits, delaying a possible combination, Bloomberg reported.
Offer may need to increase
“The longer they wait the further along Navistar will be in its recovery — which may boost the price at which they are willing to sell,” Jefferies Group analyst Stephen Volkmann told FreightWaves in June.
Navistar’s biggest shareholder is businessman and philanthropist Carl Icahn with 16.8%, followed by TRATON at 16.7%. Mark Rachesky, the founder and chief investment officer of MHR Fund Management, is Navistar’s third-largest shareholder with a 16.3% stake.
The Navistar board of directors says only that it is studying the TRATON offer. Navistar executives offer no substantive comment despite peppering by analysts on quarterly earnings calls. Navistar reports its Q3 fiscal earnings on Sept. 9.
Changes at the top
Changes at the top of both TRATON and Navistar in July shed no light on the buyout. TRATON CEO Andreas Rentscher retired July 8 amid a series of executive shakeups at VW. Rentschler’s replacement, Matthias Gründler, is said to favor the buyout, which would clear a path for TRATON to compete in North America with its biggest rivals, Daimler Trucks AG and Volvo AB.
Navistar president, CEO and chairman Troy Clarke retired from those positions July 1 after three extensions by the company board. He is now executive chairman, a newly created position to oversee the TRATON matter.
Clarke’s successor as CEO and president, Persio Lisboa, works closely with TRATON. In October 2019, Lisboa announced a plan to allow Scania to sell mining equipment in Canada through International truck dealers.
TRATON and Navistar have a $5 billion powertrain and purchasing alliance. TRATON has influence into Navistar’s 4.0 strategic plan that includes a goal of 25% share of medium- and heavy-duty truck market share by 2025.
VW’s heavy-truck division was created in June 2018 from acquisitions of Germany’s MAN and Sweden’s Scania and includes Brazilian unit Volkswagen Caminhões e Ônibus.