Navistar International Tuesday announced Volkswagen will be acquiring a roughly 17 percent stake in the company, opening the door to North America for the world’s largest automobile and truck maker and setting up a strategic powertrain alliance between the two companies.
In the near term, the new partnership will focus on developing common power train systems that are set to be delivered to North American customers by 2019.
Navistar President and CEO Troy Clarke says the long term goal of the joint-venture is to expand the technology options available to customers, like advanced driver assistance systems, connected vehicle solutions, cabin and chassis components and fuel efficiency technologies.
“The alliance brings together two companies with complimentary market positions,” says Andreas Renschler, CEO of Volkswagen Truck & Bus and member of the Board of Management of Volkswagen AG responsible for commercial vehicles. “Together we cover about 75 percent of the global profit pool.”
As part of the deal, Volkswagen Truck & Bus gets 16.2 million newly issued shares in Navistar – a 16.6 percent stake in the company – and two seats on the company’s board of directors. Navistar gets $256 million – a valuation of $15.76 per share and a 12 percent markup of the stock’s price at close Friday.
Further, the alliance is expected to produce a procurement joint venture that leverages the purchasing power of Volkswagen Truck & Bus’s three major truck brands – Scania, MAN and Volkswagen Caminhões e Ônibus – in addition to Navistar’s International and IC Bus brands, providing Navistar with enhanced global scale.
Volkswagen brings to the table leading market position in European and South American truck markets. For Volkswagen, Navistar unlocks the North American market, where International holds the largest dealer network and is a leading truck brand in Mexico and Latin America. As part of the agreement, Volkswagen will receive revenue through the supply and licensing of its power train solutions.