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VW Board Preparing Next Steps for Truck Unit Listing


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Transport Topics  /  September 14, 2018

Volkswagen AG’s board is working toward a decision to list its heavy-truck division, a move that would generate fresh funds for its bid to challenge global leaders Daimler AG and Volvo AB, according to people familiar with the matter.

VW’s supervisory board plans to discuss the matter early the week of Sept. 17, and the truck unit will host a capital markets day later in the week at the sidelines of the commercial vehicle show in Hanover, Germany, said the people, who asked not to be identified as the talks aren’t public. VW intends to list the truck unit’s shares next year, but the timing will depend on market conditions, they said.

While Volkswagen hasn’t formally mandated banks yet, Goldman Sachs Group Inc. and Bank of America Corp. are in a good position to become global coordinators for Traton’s listing, according to people familiar with the matter. Volkswagen also may hire a third lead bank on the transaction, another person said.

Representatives for VW and the banks declined to comment.

The business has been turned into a stock corporation and was renamed Traton AG this year to clearly distinguish it from VW’s larger passenger-car division. Key VW stakeholders — including the German state of Lower Saxony, VW’s second-largest shareholder with a 20% stake, and the company’s powerful labor unions — have backed the project.

The initial public offering of the unit — which is made up of the highly profitable Swedish Scania brand, Germany’s MAN truck and bus marque as well as a business in Brazil — marks the most significant structural shift for VW so far as it undergoes a major overhaul. New CEO Herbert Diess is working to make the world’s largest automaker less centralized and more agile by 2025 to tackle a seismic industry shift toward electric vehicles and new digital services.

German rival Daimler AG is adopting a new corporate structure as well that will grant its truck business more independence, but executives have remained tight-lipped so far about a possible IPO.

VW trucks chief Andreas Renschler has been the key driver behind the manufacturer’s intensified effort to improve cooperation between Scania and MAN and expand his division’s footprint outside Europe. He joined Volkswagen in 2015 after almost a decade of running Daimler’s truck unit, the world’s biggest commercial-vehicle manufacturer by revenue.

A successful share sale would generate funds for Renschler’s push to catch up with rivals in terms of global reach.

Earlier this year, the manufacturer signed a cooperation agreement with Toyota Motor Corp.’s Hino division, and the company also is looking to increase its presence in China.

Compared with Daimler, which owns the Freightliner truck brand, or Volvo, which builds Mack models, the VW division only recently has gained a foothold in North America, with the purchase two years ago of a stake in U.S. peer Navistar International Corp.

The company said in April that lifting the stake in Navistar, including a possible acquisition, would be an option.

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Sounds like the IPO decision has been made, it's just a question of timing.

Still not convinced Traton will make a move to acquire all of NAV.  Quite possible that NAV doesn't want to sell, and Traton can get all they want through equity and JV projects.

 

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VW Board Is Preparing Next Steps for Truck Unit Listing

Bloomberg  /  September 14, 2018

Volkswagen AG’s board is working toward a decision to list its heavy-truck division, a move that would generate fresh funds for its bid to challenge global leaders Daimler AG and Volvo AB, according to people familiar with the matter.

VW’s supervisory board plans to discuss the matter early next week, and the truck unit will host a capital markets day later in the week at the sidelines of the commercial-vehicle show in Hanover, Germany, said the people, who asked not to be identified as the talks aren’t public. VW intends to list the truck unit’s shares next year, but the exact timing will depend on market conditions, they said.

While Volkswagen hasn’t formally mandated banks yet, Goldman Sachs Group Inc. and Bank of America Corp. are in a good position to become global coordinators for Traton’s listing, according to people familiar with the matter. Volkswagen may also hire a third lead bank on the transaction, another person said.

Representatives for VW and the banks declined to comment.

The trucks business has a value of about 28.5 billion euros ($33.3 billion), according to Bloomberg Intelligence analyst Michael Dean. It generated revenue of about 24 billion euros last year, with Europe accounting for 73 percent of sales.

During a recent meeting with investors in London, VW Chief Financial Officer Frank Witter’s tone concerning the IPO “was far more reserved due to the sharp revision of trucks multiples,” Evercore ISI analyst Arndt Ellinghorst said in a note to clients last week. The threat of trade barriers and lower cyclical demand for the vehicles has hurt the division’s valuation.

VW shares rose 2.3 percent to 142 euros in Frankfurt trading at 3:37 p.m. The stock has declined 16 percent this year.

Structural Shift

The business has been turned into a stock corporation and was renamed Traton AG this year to clearly distinguish it from VW’s larger passenger-car division. Key VW stakeholders -- including the German state of Lower Saxony, VW’s second-largest shareholder with a 20 percent stake, and the company’s powerful labor unions -- have backed the project. VW will retain a controlling stake in Traton.

The IPO of the unit -- which comprises the highly profitable Swedish Scania brand, Germany’s MAN truck and bus marque as well as a business in Brazil -- marks the most significant structural shift for VW so far as it undergoes a major overhaul. New Chief Executive Officer Herbert Diess is working to make the world’s largest automaker less centralized and more agile by 2025 to tackle a seismic industry shift toward electric vehicles and new digital services.

Bigger Payload

German rival Daimler AG is adopting a new corporate structure as well that will grant its truck business more independence, but executives have remained tight-lipped so far about a possible IPO.

VW trucks chief Andreas Renschler has been the key driver behind the manufacturer’s intensified effort to improve cooperation between Scania and MAN and expand his division’s footprint outside Europe. He joined Volkswagen in 2015 after almost a decade of running Daimler’s truck unit, the world’s biggest commercial-vehicle manufacturer by revenue.

A successful share sale would generate funds for Renschler’s push to catch up with rivals in terms of global reach. Earlier this year the manufacturer signed a cooperation agreement with Toyota Motor Corp.’s Hino division and the company is also looking to increase its presence in China. Compared to Daimler, which owns the Freightliner truck brand, or Volvo, which builds Mack models, the VW division has only recently gained a foothold in North America, with the purchase two years ago of a stake in U.S. peer Navistar International Corp.

The company said in April that lifting the stake in Navistar, including a possible acquisition, would be an option.

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2 hours ago, james j neiweem said:

How are they going to get Navistar? One big gulp or one slice of bologna at a time.

Jim, if they buy, I imagine it would be a single purchase.

As said above, it is possible that Troy Clarke and the board don't want to sell, or VW (Traton) would be satisfied with equity and joint-venture projects. I think they'd rather own, buy out as Daimler and Volvo did Freightliner and Mack.

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Maybe, maybe not.  Even if Traton does buy Navistar, I think it would be highly unlikely that either MAN or Scania would be introduced to the U.S. market.  However, a JV with GM could be valuable to Navistar, particularly in class 3-6.  GM provides engineering, components, and a lot more dealers focused on the medium duty market.  Sure, there would be some internal competition between International and Chevy Commercial dealerships, but the combined number of dealers would be a very serious competitor to Ford in class 3-6.  Why wouldn't Traton want that?  A strong presence in class 3-5 is something DTNA does not have. 

 

  

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I think VW wants a light commercial JV with Ford primarily for Western Europe.  I have a suspicion Ford sees VW as a way OUT of Europe if things get much worse for them there.  Something of a win-win.  Or maybe a win-'not loose so much'! 

Traton wants to be Daimler Trucks, simple as that.  And they have a chance.

 

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