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Traton plans to resume Navistar takeover push


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Bloomberg  /  September 4, 2020

Volkswagen Group's heavy-truck business plans to make a fresh push to acquire Navistar International Corp. after talks were put on hold amid the coronavirus pandemic.

VW’s Traton is seeking to restart negotiations this month to win over Navistar’s management and the main shareholders, including billionaire investor Carl Icahn.

The German company’s truck unit in January offered to buy the rest of Navistar for $35 a share in cash, or $2.9 billion, to secure a bridgehead in the U.S. heavy-truck market and step up its challenge to Daimler and Volvo AB. VW already owns 16.7 percent, the second-biggest stake.

VW and Traton executives earlier this year stoked doubts among investors about whether the deal would move ahead after acknowledging that talks were on hold due to the pandemic, despite reiterating that the strategic rationale remained.

Navistar, which builds International-brand trucks, school buses, defense vehicles and engines, still hasn’t accepted nor rejected the offer. Chairman Troy Clarke said in June that the offer “remains on the table” while adding that the pandemic “slowed the process.”

It remains unclear whether the $35-a-share offer will satisfy Icahn, the No. 1 shareholder with 16.8 percent, and Mark Rachesky, the founder and chief investment officer of MHR Fund Management, which is Navistar’s third-largest shareholder with a 16.3 percent stake. VW has the firepower to bump if needed.

Shares of Navistar have gained 15 percent this year to $33.17 a share, valuing the company at $3.3 billion, eating away at the original premium in the bid.

VW’s heavy-truck division was created from acquisitions of Germany’s MAN and Sweden’s Scania. The unit had for years struggled to combine the operations before hiring former Daimler executive Andreas Renschler, who spearheaded a partial listing of Traton last year. Renschler left in July amid a series of executive shakeups at VW.

VW purchased its stake in Navistar in 2017, laying the groundwork for a footprint in North America.

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Carl Icahn’s feud with former protégé threatens Navistar sale

Josh Kosman, New York Post  /  September 7, 2020

Carl Icahn has been squabbling with a former protégé in negotiations to sell a truck-making giant — and investors fret that the tiff could land the deal in a ditch.

The 84-year-old billionaire is squaring off against Mark Rachesky — a hard-charging financier who worked for him for six years in the 1990s — over the asking price for Navistar, which makes the International line of big rigs, as well as buses and military vehicles, sources told The Post.

Traton, a Volkswagen subsidiary that makes the German auto giant’s trucks and buses, offered to buy Navistar in January for $35 a share, or $2.9 billion, in a deal that could enlarge VW’s share of the US truck market. Navistar shares surged more than 50 percent to above the asking price, and Navistar hired bankers in February to respond.

Not long after Traton made its offer, Rachesky, a large Navistar shareholder who controls a seat on the board, told some of Navistar’s directors that he wanted more than $70 a share, sources said. While other board members, including Icahn, agreed that Traton needed to sweeten its offer, they didn’t expect Traton to double it, sources said.

Talks were then stalled due to COVID-19, but Navistar’s board is now scrambling to align itself before discussions resume this month, sources said. Traton, which has seats on Navistar’s board, is Navistar’s biggest stockholder with a 17 percent stake. Icahn and Rachesky’s MHR Fund Management each hold stakes of roughly 16 percent.

It couldn’t immediately be learned what price Icahn wants, but sources close to the situation say it’s significantly lower than $70.

“Any speculation on MHR setting a price is reckless and completely false, and only serves to create unnecessary distraction and strife,” a Rachesky spokesman said in a statement, declining to comment specifically on whether Rachesky had floated the sky-high price to fellow directors.

“[Navistar Chairman] Troy Clarke is running a thorough and comprehensive process to negotiate a deal with Traton that assures value for all shareholders,” the spokesman added. “He has MHR’s full support.”

Nevertheless, some investors worry that Rachesky could endanger the deal if he holds out. That’s despite the fact that Navistar’s stock has lately bounced from a COVID hit that brought it near $15 in March and April, closing at $37.35 on Friday.

“Navistar was not worth what Rachesky was asking for,” one source close to Navistar fumed.

“Maybe if Mark had said $55 to the other directors . . . a deal could have been had before the pandemic.”

Another source put it more bluntly: “The rest of the board is not in love with Mark.”

A Stanford-trained medical doctor before he embarked on an investing career, Rachesky has done well for himself since branching out on his own. In 2012, he and his wife, Jill, paid $33 million for a swanky apartment at

834 Fifth Ave.
with four fireplaces and 7¹/ baths, according to Forbes.

But critics say his lofty demands have gotten in the way of deals before.

His second-biggest holding next to Navistar is a 58 percent stake in Loral, a satellite company he has controlled since 2005. In 2015, the Ontario Teachers’ Pension Plan had a handshake deal with Loral to buy it for $7 billion, or $85 a share, The Post reported at the time.

And as chairman of Loral, Rachesky walked away, apparently after refusing to pay a $300 million consent fee to a co-investor, The Post reported. The shares are presently trading at $23.13. While Loral has been consistently paying dividends since, they don’t come close to offsetting the lost, fourfold premium.

And his performance has lagged in recent years. In 2007, MHR raised a $3.5 billion fund that Forbes said was generating a 13 percent annual return. At the end of last year, that return had fallen to 5.1 percent, according to the Oregon Employees Retirement Fund. That places it in the lowest 25 percent of buyout funds raised at that time, according to Cambridge.

Rachesky last raised a fund in 2016 that closed on $2.3 billion. That fund had generated only a 1 percent annual return as of Dec. 31, according to the Oregon pension. A source close to Rachesky, however, said the fund surged 32 percent during the first half of this year, leaving it with a gross return of 16 percent.

As anxiety about the Navistar deal continues to mount, longtime media and telecom banker Woody Young of Perella Weinberg Partners came to Rachesky’s defense.

“Mark is one of the smartest, most strategic and disciplined investors I’ve ever met,” Young told The Post. “The record shows that when he realizes investments, he makes fortunes for his limited partners.”

Navistar, meanwhile, faces growing skepticism from analysts about its chances for a lucrative buyout.

“Based on Traton’s history with buyout situations, we doubt it will raise its bid or that any competing proposal will emerge, especially given Navistar’s levered balance sheet and currently anemic demand for commercial vehicles,” BMO Capital Markets said in a June 4 report.

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Realistically, Traton are the only One Interested In navistar.. A little bit of patience & they'll win out.

I'm surprised that CNH (iveco) haven't been scoping out a Deal, They're the Only other possible Candidate (In my Opinion).

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"Be who you are and say what you feel...
Because those that matter...
don't mind...
And those that mind....
don't matter." -

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16 hours ago, Hayseed said:

Realistically, Traton are the only One Interested In navistar.. A little bit of patience & they'll win out.

I'm surprised that CNH (iveco) haven't been scoping out a Deal, They're the Only other possible Candidate (In my Opinion).

Wouldn't that be ironic? We could have Case International trucks. 

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5 hours ago, Dirtymilkman said:

Wouldn't that be ironic? We could have Case International trucks. 

Imagine the power of the Dealer network! if they Could execute it Properly..

"Be who you are and say what you feel...
Because those that matter...
don't mind...
And those that mind....
don't matter." -

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Traton Ups Navistar Offer

Heavy Duty Trucking (HDT)  /  September 10, 2020

Traton on September 10th upped the ante in its offer to buy all outstanding shares of common stock of Navistar International Corp. The new offering price of $43 per share in cash is a 23% increase from the $35 per Navistar share that Traton offered at the end of January, according to an announcement from the company. Traton, formerly VW Truck and Bus, currently holds 16.8% of Navistar’s outstanding common shares. 

“We continue to believe in the compelling strategic benefits that a complete merger of Traton and Navistar would produce. This is why we are re-emphasizing our interest in the transaction in spite of the Covid-19 pandemic,” said Matthias Gründler, CEO of the Germany-based commercial vehicle manufacturer, in a press release.

According to MarketWatch, the offer represents a 20% premium over Navistar’s stock closing price of $35.84 on Sept. 9. Navistar Wednesday reported a wider-than-expected third-quarter loss. Its shares jumped 16.5% to a two-year high in morning trading after the announcement.

Traton said in the announcement that it expects the Navistar’s board of directors to review the increased offer. The New York Post reported on Sept. 7 that a squabble on the board could derail the merger, with one member demanding a significantly higher share price than even the sweetened offer.

The offer remains subject to a satisfactory due-diligence process as well as negotiation and a common understanding as regards the merger agreement, and any resulting merger agreement would be subject to final approval by the boards of Traton and Volkswagen AG, and Navistar’s board and stockholders.

Navistar issued a statement confirming receipt of the proposal and said, "Navistar's board of directors and management team are committed to exploring all avenues to maximize value. Consistent with its fiduciary duties, the board will carefully review the revised proposal from Traton in consultation with its advisors to determine the course of action that it believes is in the best interests of the company and its stakeholders." The company warned that "there is no assurance that any transaction with Traton will occur or be consummated. Navistar does not intend to make any additional comments regarding the proposal unless and until it is appropriate to do so, or a formal agreement has been reached."

Traton was formed in 2018 out of Volkswagen’s Truck and Bus Group, in order to spearhead the German automaker's push to become a major player in the global commercial vehicle market. That bid included establishing a presence in North America – the world’s highest volume commercial vehicle market.

To further that goal, Volkswagen had already developed a close relationship with Navistar, in 2016 announcing a strategic alliance that included various research and development projects. That alliance has helped lead to Navistar introducing a version of Volkswagen truck brand MAN’s diesel engine as the International A26 engine for International Class 8 trucks and more recently, a prototype electric medium-duty truck.

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The trouble behind Traton’s offer to buy Carl Icahn-backed Navistar

New York Post  /  September 11, 2020

Even as Volkswagen subsidiary Traton revs up its efforts to buy a trucking company linked to billionaire Carl Icahn, sources warn that its merger plans could still easily veer off course.

In a press release Thursday, Traton said it increased its offer to buy Navistar — the company behind the International brand of trucks and diesel engines — to $43 a share. Shares of Navistar jumped 16 percent to $41.59 on the news, up from a previous close of $35.84 a share, before closing up 14 percent at $40.78 a share.

But a sale is still far from certain because Traton only made its offer for Navistar public after merger discussions with the board broke down.

Problems arose when Navistar’s board demanded that Traton agree to consider a set price of around $50 a share in order to gain access to Navistar’s financials and begin advanced merger discussions. Not willing to commit to the higher amount, Navistar instead went public with its offer in hopes of convincing shareholders to back the sale at $43 a share.

Traton on Thursday noted that its sweetened offer represents a 23 percent premium over its January proposal to buy Navistar for $35 a share at a time when deals have been collapsing left and right due to the coronavirus.

“We continue to believe in the compelling strategic benefits that a complete merger of Traton and Navistar would produce,” said Traton CEO Matthias Gründler. “This is why we are re-emphasizing our interest in the transaction in spite of the Covid-19 pandemic.”

Navistar said it would review the revised offer.

“Navistar’s board of directors and management team are committed to exploring all avenues to maximize value. Consistent with its fiduciary duties, the board will carefully review the revised proposal from Traton,” Navistar said.

Traton’s hope is that the move pressures the board — whose members include Icahn and a representative for Icahn’s one-time protégé Mark Rachesky — to take the deal or risk angering shareholders if it falls apart and the stock collapses, sources said.

Jefferies Analyst Steve Volkmann has predicted, for example, that Navistar’s shares will settle lower — to between $27 and $30 a share — if no deal is announced in the coming weeks.

It’s unclear which board members may have been holding out for a higher price and why. Icahn and Raschesky each control roughly 16 percent of Navistar’s stock.

But as The Post reported earlier this week, Rachesky told some of Navistar’s directors after Traton made its $35 offer in January that he wanted more than $70 a share — causing jitters ahead of negotiations that were set to resume this week following  a coronavirus-induced lull.

And it does appear at least one top ten shareholder is willing to settle for less than the desired $50 a share. A large Navistar shareholder not associated with Icahn or Raschesky told The Post on Thursday that he thinks that Navistar should sell if it can get Traton to raise its offer by just a few dollars.

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1 hour ago, Dirtymilkman said:

So say a certain guy I know bought 1800 shares of NAV when it was $15, what is the magic number to sell it at? 

$43 to $47.

Then, invest that money in Energy Transfer (symbol ET) while it’s presently under $6.00, particularly for the 20% yield dividend.

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