LISLE, Ill. — Navistar International Corp. and Volkswagen Truck and Bus (VW) yesterday closed their strategic alliance, including a 19.9 percent purchase by VW of Navistar stock, by which the U.S. truck and parts maker receives a $256 million investment from VW for general corporate purposes. The alliance began last September.
Navistar is based in Illinois, while VW’s headquarters are located in Wolfsburg, Germany.
The closing of the alliance follows receipt of all necessary regulatory approvals, finalization of agreements relating to the procurement joint venture and the technology and supply collaboration, and satisfaction of other customary closing conditions, Navistar reported.
“This alliance with Volkswagen Truck & Bus marks a significant milestone in our company’s history, and we expect it will create multiple benefits for both companies in both the near and long term,” said Troy Clarke, chairman, president and CEO of Navistar. “Now that the transaction has closed, we will move quickly to collaborate with an industry-leading, strategic partner to increase our global scale, strengthen our competitiveness, and provide our customers with expanded access to cutting-edge products, technology and services.”
“The authorities have given our strategic alliance with Navistar the green light,” said Andreas Renschler, CEO of Volkswagen Truck and Bus. “Our newly-founded purchasing cooperation will begin work immediately. This puts both partners in a stronger position for the future. The strategic alliance provides Volkswagen Truck & Bus with access to the all-important North American market. This is a major step toward becoming a global champion,”
The merger has been generally lauded by industry analysts as a positive move for both companies.
“Of course it’s good,” said Brian Sponheimer, an industry analyst with Gabelli and Co. of Rye, New York, in a January interview with The Trucker. “Navistar gets the benefit of VW’s balance sheet and technology. Dealers get the confidence to go out and sell their trucks. There’s a chance for that to improve as … the truck cycle recovers in the near future.”
As part of the deal VW may appoint two members of the Navistar board of directors, and reported today the naming of Renschler and Matthias Grundler, VW’s chief financial officer, to the Navistar board.
“We are excited to welcome Andreas Renschler and Matthias Gründler to the Navistar Board, and are confident that we will benefit from their deep industry knowledge and fresh perspectives,” said Clarke. “Their expertise in commercial vehicle production will be invaluable as we strive to become the North American champion in our industry.”
Global Truck & Bus Procurement LLC, the procurement joint venture created by Navistar and Volkswagen Truck & Bus, will start work effective immediately, the companies reported. As part of the alliance, it will create new opportunities for quality improvement and cost reduction, and will enable both companies to benefit from increased global scope and scale. The joint venture is operating out of Navistar’s headquarters in Lisle, Illinois.
The companies’ Stockholm, Sweden-based ongoing technology and supply collaboration is “intended to facilitate collaboration on several aspects of commercial vehicle development, including advanced powertrain technology solutions,” the companies stated.
Finally, Navistar expects the alliance to be accretive beginning in the first year, and for cumulative synergies for Navistar to total “at least” $500 million over the first five years.
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