Volkswagen to Take 19.9% Stake in Navistar
Volkswagen to pay about $16 a share for Navistar stake
Volkswagen AG is nearing an agreement to take a 19.9% stake in truck maker Navistar International Corp.
The companies plan to announce the deal Tuesday, which will come with two board seats for the German automaker, according to a person familiar with the matter.
Volkswagen will pay about $16 a share for the stake in Navistar. The Lisle, Ill., company’s stock closed Friday at $14.07, giving it a market value of about $1.2 billion. It has more than $5 billion of debt, according to S&P Capital IQ.
As part of the agreement, whose broad outline Reuters earlier reported, the companies will cooperate on procurement and new-product development, the person said.
The expected pact doesn’t give Volkswagen an explicit option to buy Navistar, which has been buffeted by a prolonged slump in market demand, though the stake could ultimately provide a stepping stone for a full takeover, the person added.
Navistar in June said it swung to a surprise profit in its latest quarter, its first since 2012 as the company slashed costs amid weak demand. The company also cut its outlook and said it was unlikely to make a full-year profit.
Navistar’s shares have ground steadily lower over the years, and were at more than $50 in 2011.
Volkswagen will not be the only big investor on Navistar’s share register. In 2013, the company agreed to let Carl Icahn and Mark Rachesky boost their stakes to 19.9% each. In exchange, the prominent investors said they would shelve any efforts to take control of the company. The agreement also enabled the investors to boost the number of board seats between them to four.