Volkswagen Truck & Bus will
be picking up a 16.6pc equity stake in US-based commercial vehicles
manufacturer Navistar International Corporation for around US $ 256 million (Rs
1696 crore approximately). The closing of the share acquisition is expected to
be completed in late 2016 or early 2017.
According to a press release
issued by Volkswagen, the two companies will pursue a strategic technology and
supply cooperation and establish a procurement joint venture.
Navistar, which has been
facing major financial crises in the past is expected to gain not only from
this fresh inflow of cash but also benefit from the synergies that arise from
the association with the strong German brand Volkswagen. Navistar at one point
of time had a collaboration with Mahindra & Mahindra for manufacturing
trucks in India but the joint venture was called off after seven years in 2012.
Mahindra announced purchase of the Navistar Group’s stake in Mahindra Navistar
Automotives Ltd (MNAL) and Mahindra Navistar Engines Pvt Ltd (MNEPL). The deal was
worth around Rs 175 crore.
Since then Mahindra Truck and
Bus Division is part of the Mahindra & Mahindra company.
Navistar’s reason to exit its
Indian JVs was part of its turnaround strategy, which was focused on
strengthening its North American core businesses and pursuing near-term
initiatives to improve the company’s return on invested capital performance.
Now in this latest deal, Volkswagen
Truck & Bus will purchase a 16.6% stake in Navistar for a price per share
of $15.76 and an aggregate purchase price of approximately $256 million (or
approximately €229 million at current exchange rates). In connection with this
investment, Volkswagen Truck & Bus will be represented on Navistar's Board
of Directors. In addition, both companies have agreed to collaborate closely,
the release from Volkswagen added.
With the completion of this latest
transaction, Volkswagen Truck & Bus, which includes the brands MAN, Scania,
and Volkswagen Caminhões e Ônibus, will gain access to the key North American
market, where it was not previously represented. Andreas Renschler, CEO of
Volkswagen Truck & Bus and member of the Board of Management of Volkswagen
AG responsible for commercial vehicles, said: "Closer collaboration among
our existing brands was a top priority for our commercial vehicles business and
we are well on track in this context. We are now taking the next step on our
way to becoming a Global Champion in the commercial vehicles industry. The
strategic alliance with Navistar is an important milestone and will be very
beneficial for both sides."
"We are very pleased to
partner with a global leader who shares our view of the world, in an alliance
that will deliver multiple benefits and is consistent with our open-integration
strategy," said Troy Clarke, President and CEO of Navistar. "Starting
in the near term, this alliance will benefit our purchasing operations through
global scope and scale. Over the longer term, it is intended to expand the
technology options we are able to offer our customers by leveraging the best of
both companies and enabling Navistar to deliver enhanced uptime. Volkswagen
Truck & Bus's equity investment will strengthen our liquidity position and
expand our financial flexibility, while aligning us with a valuable strategic
partner," he added.
Matthias Gründler, CFO of
Volkswagen Truck & Bus, said: "Our collaboration, especially with
regard to the powertrain, will considerably increase our synergy potential.
Navistar will be able to profit from excellent powertrain technologies and we,
in turn, will benefit from significantly higher volumes. Initiating this
strategic alliance now will enable us to implement the requirements of Navistar
into our joint component platforms from the get-go."
With the strategic technology
and supply cooperation, Volkswagen Truck & Bus will become one of
Navistar's most important technology partners. While the partnership will focus
on common powertrain systems, it will also enable collaboration in many aspects
of future commercial vehicle development.
Additionally, Volkswagen Truck
& Bus and Navistar have agreed to establish a procurement joint venture
that will pursue joint global sourcing opportunities.
Under the umbrella of
Volkswagen Truck & Bus, Andreas Renschler has been heading the process of
bundling medium- and heavy-duty trucks and buses of Volkswagen AG into a robust
commercial vehicles group. The Company's strategy includes plans to expand into
new regions. Within the next decade, Volkswagen Truck & Bus aims to become
a worldwide leading commercial vehicles group in terms of profitability,
innovations for its customers and global presence, Volkswagen said in its
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