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US Based Truck Maker Navistar To Be Acquired By Volkswagen Truck Unit Traton

US Based Truck Maker Navistar To Be Acquired By Volkswagen Truck Unit Traton
German auto giant Volkswagen AG is expanding the reach of its trucking business in North America. The company has announced a deal worth $3.7 billion in which its truck unit Traton SE will be purchasing the outstanding shares of United States based truck maker Navistar International Corp. The two companies announced the deal on Saturday.
On October 16, Traton had said that it had agreed to raise its bid for Navistar to $44.50 per share compared to its previous proposal of $34. This finalisation of the acquisition deal now sets Volkswagen to become a global manufacturer of trucks.
The acquisition deal will also bring together a MAN, Scania and Volkswagen trucks brands with those of Navistar. This deal is also in line with  the current trend sin the truck making industry of the world which have been trying to find out ways to share the financial burden for the development of technologies to meet the ever stricter emission regulations being imposed on conventional vehicles all over the world.
A 16.7 per cent stake in Navistar is also already held by Traton.  A total amount of about $3.7 billion will now be paid by Traton for the additional shares of Navistar that it doesn't already own and those that it would be acquiring through this deal at the increased offer price. The increased price offer now sets the market valuation of the US company at about $4.4 billion.
The US truck maker said in a separate statement that an agreement has been reached for vote in favor of the deal between the company and its major shareholders in Navistar including Icahn Capital LP and MHR Fund Management LLC.
In order to fund the deal, a loan of 3.3 billion euros, repayable over 12-18 months, will be given to Traton by the Volkswagen group.
“We are pleased to have reached agreement in principle for a transaction after intensive negotiations with Navistar,” said Matthias Gründler, chief executive officer of Traton SE. “We are looking forward to completing our due diligence and obtaining the necessary approvals in respect of this exciting deal in order to welcome the new Traton family member.”
With a range of integrated vehicles ranging from class 4 to 8, International Truck is Navistar’s flagship vehicle. A dealer network of about 1,000 locations in the United States, Canada, Brazil and Mexico also supports the truck brand.
The background of Navistar dates back to 1831, with the development of first truly practical mechanical reaper by Cyrus McCormick, while the brand International Truck was created in 1902.
Light, medium and heavy-duty diesel engines, the IC Bus brand and Navistar Defense are also manufactured by Navistar in addition to the International Truck brand. Therefore the company has a complete portfolio of both tactical and commercial off-the-shelf military vehicles.
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Christopher J. Mitchell

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