Navistar Shareholders Clear the Traton Takeover, Putting the Pedal to the Metal for Volkswagen Stock
Traton already has a major presence in Europe, Asia, Africa, and Latin America.
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Shareholders in leading U.S. truck maker Navistar have approved the takeover from Traton. A long time coming, investor clearance for the acquisition paves the way for the German trucking giant to speed into the U.S. market at a deal that prices Navistar shares higher than they have been in more than three years.
Investors cheered the approval, with Traton stock climbing 2.5% higher and shares in Volkswagen, which owns the majority of Traton, surging near 5%.
The back story. Traton, a spinoff of Volkswagen that went public in 2019, already owns 17% of Navistar. That stake is Traton’s only exposure to the key U.S. trucking market, while it has a substantial presence across Europe, Asia, Africa, and Latin America as one of the world’s largest commercial vehicle manufacturers.
For Traton, which includes Scania, MAN, and VW Caminhões among its brands, the U.S. represents a massive opportunity. It has tried to buy Navistar for more than a year, but both its $35 per share bid in January 2020 and $43 per share offer in September 2020 were rejected.
In November 2020, the two companies finally reached a definitive agreement at a price of $44.50 per share. The multiple offers, and speculation around a deal, have caused volatility in Navistar stock, with shares trading more than 60% higher since before the January 2020 bid.
Also read:Traton’s Takeover of Navistar Is Near. What the Trucking Deal Means for the German Giant.
What’s new. Navistar said on Wednesday that investors cleared Traton’s takeover for $44.50 per share at an annual meeting on Tuesday. Shareholder approval is a green light for Traton to acquire the remaining 83% of Navistar that it didn’t already own for $3.7 billion in cash, to be financed by Volkswagen.
The transaction is expected to complete in mid-2021, subject to regulatory approvals and the satisfaction of typical closing conditions.
The deal values the U.S. truck maker at around $4.4 billion and marks a significant expansion for Traton. Gunnar Kilian, a member of Volkswagen’s management board responsible for the truck and bus division, said when the agreement was reached that it would “significantly leverage Traton’s positioning in North America, one of the biggest and most profitable markets for heavy trucks.”
Plus:Apple’s Search for an Autonomous Vehicle Partner Continues. Who It Could Choose.
Looking ahead. The last significant speed bump to the takeover has been passed, and it’s a deal that just keeps giving to Traton and Volkswagen shareholders. When the definitive agreement was reached months ago, Volkswagen and Traton shares were both lifted 7% to 8%, and the stock moves higher today suggest that the market hadn’t fully priced in shareholder approval.
It also reflects how good this deal is for Traton, and Volkswagen, via its ownership stake. The $3.7 billion deal could be worth every penny if Traton can leverage the Navistar business to corner the U.S. market and establish global trucking dominance.
And Navistar shareholders have reason to breathe easy. Navistar has wrung a good deal out of Traton, and, assuming it completes smoothly, the transaction for $44.50 per share values the stock higher than it has been in more than three years.
