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Volkswagen Unit Considering Full Takeover of Truck Maker Navistar

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The Wall Street Journal  /  April 16, 2018

Volkswagen AG's commercial-vehicles unit said it is considering a full takeover of Navistar International Corp., one of America's largest truck makers with a market value of nearly $4 billion -- an ambitious move for the German auto maker just days after naming a new chief executive.

Volkswagen Truck & Bus GmbH already owns just shy of 17% of Illinois-based Navistar and officials at the unit said Monday it could raise that stake or even launch a full takeover.

The suggestion comes amid huge upheaval at Volkswagen. The company's board ousted Matthias Müller as CEO last week, replacing him with Herbert Diess, and reshuffled several executive board posts. Upon taking control Friday, Mr. Diess vowed to accelerate the pace of change at Volkswagen, including a potential stock market listing of its trucks business.

It also comes at a politically sensitive time for the German auto industry. U.S. President Donald Trump has repeatedly accused Europe of using what he characterizes as unfair international trade rules to flood the American market with imported vehicles. A charge German car companies refute.

Talking to reporters Monday, Volkswagen Trucks CEO Andreas Renschler suggested a full takeover of Navistar would be "a good idea" as the company builds out its global strategy ahead of a possible initial public offering.

Finance chief Matthias Gründler said the company could use proceeds from an IPO to fund the acquisition but also suggested it could mount a takeover beforehand, saying financing such a deal would be "manageable."

Navistar, whose shares rose nearly 6% on the news, said the comments were speculation but noted its alliance with Volkswagen was "demonstrating strong progress."

Navistar is the successor company to International Harvester, whose roots go back to the Cyrus McCormick's invention of the mechanical reaper for farm crops in 1831. International Harvester was dismantled during the 1980s, leaving Navistar as a company focused on trucks, engines and school buses.

Its International brand is well-known throughout the North American trucking industry and the company has an extensive network of dealers and service shops, which would be a key asset for Volkswagen. It generated $30 million of net income on revenue of $8.6 billion last year and has a near 12% share of the U.S. market for heavy trucks.

Volkswagen Trucks acquired a 16.6% stake in Navistar for about $256 million in 2016, a cornerstone of its global expansion strategy that gave the German truck maker a foothold in the U.S. as well as in Mexico and Canada. The North American Free Trade Association area is the largest truck market in the world by sales.

Volkswagen Trucks now holds about 16.9% of Navistar, Mr. Gründler said, adding that if the company lifted its stake above 17% it would be required under U.S. securities law to make an offer for the rest of the company.

Such a move would likely be welcomed by investors ahead of the IPO. Some analysts have encouraged Volkswagen Trucks to buy Navistar.

Navistar's debt and unfunded pension liability total billions of dollars, likely diminishing the price that Volkswagen would be willing to pay for the rest of the U.S. company.

Volkswagen Trucks was created in 2015 to consolidate Volkswagen's holdings in MAN trucks, Scania AB and Brazilian commercial-vehicles group Caminhoes Onibus. Volkswagen poached Mr. Renschler, the architect of rival Daimler AG's truck business, to build the company into a global business.

Through its MAN unit Volkswagen Trucks holds a 25% stake in Hong Kong-based Sinotruck Ltd., one of China's largest commercial-vehicle manufacturers.

Last week, Volkswagen Trucks and Japan's Hino Motors Ltd. unveiled plans to form an alliance that is likely to see the companies jointly develop commercial vehicles for the Japanese and Southeast Asian markets. The partners hope to benefit by sharing development and procurement costs.

"That's one of the reasons for the strategic alliance. We only have to spend money once, as opposed to twice or three times," Mr. Renschler told reporters last week in Tokyo.

Hino is owned by Toyota Motors Co. Initially, the venture won't jointly produce trucks and the companies say Volkswagen has no immediate plans to acquire a stake in Hino.

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VW's trucks division open to buying majority of Navistar

Reuters  /  April 16, 2018

MUNICH (Reuters) - Volkswagen is open to buying a majority stake in U.S. truckmaker Navistar "at some point," it said on Monday, as the German automaker prepares its trucks business for a possible stock market listing that could help raise funds to expand.

Volkswagen Truck & Bus acquired a 16.9 percent stake in Navistar International Corp in 2016 and last week joined forces with Toyota's Hino Motors as it strives to compete more effectively with global truck market leaders Daimler and Volvo.

Volkswagen (VW) plans to convert its trucks division, which includes the Scania and MAN brands and a Brazil-based commercial vehicles business, into a public limited company as a prelude to a potential stock market listing.

"(Taking over Navistar) would make sense at some point," Matthias Gruendler, the finance chief of VW truck and bus, told reporters on Monday.

A takeover would require between 3 and 4 billion in extra costs and could be shouldered without proceeds from a possible initial public offering (IPO), he said, without specifying whether he was talking about euros or dollars.

"The cooperation (with Navistar) is working really well," he added.

U.S. law would require VW to issue a formal takeover bid for Navistar if the German manufacturer raises its stake in the U.S. company above 17 percent, Gruendler said.

VW paid $256 million for its stake in Navistar, bolstering Europe's biggest automaker's access to the lucrative North American truck market.

VW's trucks unit had "significant" synergies from joint procurement with Navistar last year, division CEO Andreas Renschler said.

Foreign expansion, as well as more joint development and purchasing of parts between MAN and Scania, may help VW's truck and bus operations increase their operating margin to 9 percent by about 2025 from 6.9 percent last year, Renschler added.

VW group's supervisory board last Thursday paved the way for a potential IPO of its trucks business as part of a sweeping shake-up that also included naming a new group CEO and plans to streamline its multiple car brands.

Renschler said preparations to tap capital markets either through an IPO or selling debt would take 12 months, adding MAN's Diesel & Turbo engine unit and transmissions maker Renk would be switched to VW.

"We need a lot of investment and funding," Renschler said. "We are lifting the (trucks) group to the next level."

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Surprise Surprise. 

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Volkswagen exec hints at possible, eventual Navistar takeover

Jason Cannon, Commercial Carrier Journal (CCJ)  /  April 16, 2018

Barely more than 13 months ago, Volkswagen Truck and Bus acquired approximately 16.2 million newly issued shares of Navistar stock for $256 million, and one high-level executive hinted this morning the German automaker could one day be after a large slice.

VW Truck and Bus Chief Finance Officer Matthias Gruendler said Monday at a press briefing a takeover of the Lisle, Ill.-based truck maker “would make sense at some point,” according to Reuters. “The cooperation is working really well.”

While Gruendler offered no timeline and such a move certainly doesn’t sound imminent, Volkswagen would be legally required to make an offer for the remaining Navistar shares once it acquires 17 percent or more of the company. Volkswagen currently teeters just below that threshold at 16.9 percent.

Lyndi McMillan, Navistar’s manager of external communications, said the company had no comment on speculation that VW Truck and Bus could up its stake in the company.

“What we can say is that our alliance with Volkswagen Truck & Bus, which recently celebrated its first anniversary, is already demonstrating strong progress,” she says. “We look forward to continued success with our strategic alliance.”

To-date, Navistar CEO Troy Clarke has lauded the partnership between the two companies, noting each have benefited from engineering collaborations and cost-savings.

Last week, Volkswagen installed Herbert Diess as its new chief executive and is considering a push to sell stock in its truck and bus division which, the company says, will allow it to better compete globally with rivals Daimler and Volvo.

Volkswagen’s truck and bus unit last week signed an agreement with Toyota-brand Hino, calling for the companies to collaborate on diesel and gasoline-electric hybrid engines, connectivity and autonomy, while also sharing research and development as well as procurement costs.

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VW Truck Division Signals Possible Takeover of Navistar

Transport Topics  /  April 16, 2018

Volkswagen AG’s heavy-vehicle division is open to a takeover of U.S. affiliate Navistar International Corp. as the German company seeks scale to compete with global leaders Daimler AG and Volvo AB.

Volkswagen Truck & Bus, which is changing its structure to access capital markets in about a year, might consider boosting its existing stake of just less than 17% of Navistar, though that could trigger a mandatory takeover offer, Chief Financial Officer Matthias Gruendler said April 16 at a Munich press conference. Any purchase could be funded by parent Volkswagen and not depend on an initial public offering that the truck unit is considering, he said.

A takeover “would theoretically be possible,” Gruendler said, outlining a potential price tag of about “3 billion to 4 billion,” without specifying dollars or euros. While he declined to comment on a possible time frame for a deal, he said cooperation between the manufacturers is developing well.

Andreas Renschler, head of Volkswagen Truck & Bus, outlined global growth plans at the briefing that included adding sales in China and sharing costs across its MAN, Scania and Brazilian VW commercial-vehicle operations through joint procurement and development of parts. Volkswagen bought its holding in Lisle, Ill.-based Navistar in 2016 to gain a foothold in North America, where Daimler makes Freightliner vehicles and Volvo owns the Mack brand.

Navistar shares jumped 7.3% to $39.75 as of 8:22 a.m. in New York, before regular trading. As of April 13, the stock was down 14% in 2018, for a value of $3.7 billion. Volkswagen shares fell 1.3% to 175.02 euros in Frankfurt. That pared the stock’s gain this year to 5.2%, valuing the German company at 87 billion euros ($108 billion).

The Volkswagen truck division’s preparations for an IPO or a debt sale will take 12 months, and MAN’s Diesel & Turbo engine and Renk industrial-equipment units will be shifted from the business to parent Volkswagen, the executives said.

“This comprehensive project will accelerate the transformation of our company” into “a true global champion, and will quickly make it ready for the capital markets,” Renschler said at the press conference. He reiterated that no decision has been made on an IPO.

Bigger Payload

The revamp of the heavy-vehicle division, which Evercore ISI estimates has as much as 30 billion euros in assets, marks the most significant structural shift so far for Volkswagen as the world’s biggest carmaker retools for massive change across its industry. The Wolfsburg, Germany-based manufacturer appointed Herbert Diess, head of its namesake auto brand, CEO last week, and he pledged to accelerate decision-making across the group to adapt to rapid shifts in technology and competition.

An IPO for the truck and bus unit is just one option the division is considering to gain financing, Renschler said in an interview, adding that another would be to sell bonds.

“It’s ultimately a decision for our shareholders,” he said.

VW Chairman Hans Dieter Poetsch told reporters as April 13 the auto manufacturer will retain a controlling stake in the commercial-vehicle business and that a share sale might not happen until 2019, as it still requires final approval.

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All interesting info. While I am disappointed that most of U.S makers of large trucks are owned by foreign companies, it will be interesting to see what the synergies with VW and Scania will bring to International trucks in the U.S

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Like Ford, VW Group has been sending a lot of conflicting signals lately...

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Well.........  Not surprised VW wants Navistar, and I fully expect them to raise their stake, but the timing of this statement is a bit of a shock.  Some say this guy Diess has been scheming to be CEO and used the diesel emissions debacle as leverage to get Muller thrown out, promising the board bold moves if he got the top spot.  If true I suppose this could be considered bold.  But, VW is possibly the most inefficient major automaker on the planet, and would it make sense for VW to assume NAV's substantial pension liabilities right now?  I guess if Lower Saxony doesn't care, why should anyone else?  My fear is I think VW is a house of cards, and I would hate to see them swallow NAV and then crash and burn, taking NAV with them.  If this buyout happens, I say the VW Truck spin-off can't come soon enough. 

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I've attempted to explain it before. In the way that the Europeans came out of WW2, it took them decades to claw their way back to the top. In an extremely hostile business environment, they developed an aggressive and merciless demeanor. We thought that we were the best, the benchmark for the world. And we were, coming out of WW2, for decades. Look at the great GM during the 1950s-1960s. But we began resting on our laurels from the 1970s, and with our head in the sand became soft. Now, look at us today. Foreign companies dominate our domestic market, and we have minimal heavy industry.

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Much of the rest of the worlds businesses have a longer focus too, they think out years and decades while we only think in quarters. That's why during the 80s recession when american investors were fleeing the big truck business Daimler, Renault, and Volvo took some short term losses and bought Freightliner, Mack, and White. Same thing is happening in the auto biz now- Ford's current "leadership" would sell the company's heritage for a good quarter's financials and GM is basicly a remarketer of everyone else's cars and trucks. Both are withdrawing to their home markets and maybe China. Meanwhile VW and Toyota are worldwide full line manufacturers building and selling everything from mini cars to Class 8.

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There have been traitors on the boards of directors of major US corporations and the US Government probably from about the 1970's. The major purpose of the Tri Lateral commission was to make Europe and Japan stronger and the US weaker. It has worked to perfection because it has been designed as such. The number of US industrial companies that have been taken over is legion. Combustion Engineering, Westinghouse, JI Case, International Harvester, New Holland. Allis Chalmers, Mack, White, Freightliner, Detroit Diesel etc. etc. etc. GE will probably sell their locomotive division to Siemens and spin off other industrial assets as well unless they get their act together. Just plain f'n sad.

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James, for the 1st time a big three automaker ( Buick) has imported a Chinese model the envision,branded Buick and I heard Cadillac has as well! Buicks excuse is they didn't have time to design a car to compete in that market!  Fortunately they don't appear to be selling! Buick is offering up to 8000 off on a 43000 dollar car! They are poorly rated. KSB has said they are well built and I agree they certainly have the technology, but my argument is that automobiles are one of the last fairly high end products built in America at a good wage! And virtually every foreign automaker has a plant employing American workers why would anyone buy a Chinese built car!

 

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Volkswagen Clarifies Position on Navistar Takeover in SEC Filing

Heavy Duty Trucking (HDT)  /  April 19, 2018

Volkswagen AG has cooled expectations that it is moving to take over Navistar International in an April 18 filing with the Securities and Exchange Commission. However, in the same statement, the Germany-based OEM left the door open for its Volkswagen Truck & Bus GMbH subsidiary to possibly acquire Navistar at some later date. 

The SEC form, signed by VW Truck & Bus CEO Andreas Renschler, was filed two days after media reports suggested that Volkswagen Truck & Bus was open to taking over Navistar International Corp. VW currently holds a 16.9% share in the U.S. company via a “wide-ranging strategic alliance," announced back in 2016. 

“On April 16, 2018,” stated VW’s SEC filing, “various news sources interpreted remarks, during a question and answer session, by representatives of VW T&B” to suggest that an acquisition of U.S.-based Navistar by the German firm was under consideration.

“VW T&B is not," the statement continued, "reporting any changes to its plans or proposals [for Navistar]… although as previously disclosed, VW T&B continuously reviews its investment… [in Navistar] and may in the future determine to undertake various actions in connection with its investment, including the possible acquisition” of Navistar. 

On April 16, HDT contacted VW T&B for comment on whether or not the subsidiary was considering a full takeover of Navistar. In response, Julia Kroeber-Riel, head of Group Communications & Governmental Relations for Volkswagen Truck & Bus, told HDT that, “On our way to becoming ‘Global Champion,’ we keep all options open.”

The reporting of April 16 also had it that VW T&B CFO Matthias Gruendler had indicated that U.S. law would require VW to issue a formal takeover bid for Navistar if it increases its stake above 17%. VW also sought to clarify that representation with its SEC filing, stating: “It was reported that a representative of VW T&B had stated that increases by VW T&B in its level of ownership of the Issuer [Navistar] above current levels would not be possible without VW T&B being required by Delaware law to make an offer to acquire all of the remaining outstanding shares of Common Stock not owned by it. VW T&B hereby corrects such statement by noting that neither U.S. securities law nor Delaware law includes such a requirement.” 

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