VW to buy Navistar stake
September 6, 2016
German auto giant Volkswagen Group (VW) announced on Tuesday it would buy a 16.6-percent stake in Navistar to launch a "strategic technology and supply chain cooperation" with the US firm.
In addition, the investment included a "purchasing joint venture," and would see VW's own heavy-vehicle brands, Scania and MAN, represented on Navistar's board, VW Group said in a statement.
The deal will cost VW $256 million (229 million euros) - $15.76 per share - and is scheduled to be completed by late 2016 or early 2017.
VW chairman Hans Dieter Pötsch described the agreement as "a milestone" because the auto group's VW Truck and Bus division would "gain access to the key North American market, where it was not previously represented."
At the moment, Germany's presence in the US market is dominated by VW rival Daimler, with its Freightliner brand.
Volkswagen shares enjoyed a one-percent bounce in afternoon trading in Frankfurt on Tuesday to 126.10 euros.
Brands with problems
US truck-maker Navistar has been in business since 1902. It builds trucks, coaches, construction equipment and engines for heavy vehicles, including military ones. With around 17,000 employees, the company is the US's fourth-largest heavy truck maker, boasting annual revenues of around $10 billion.
However, Navistar has seen its share price slump by almost two-thirds over the past two years, partly due to an emissions scandal. The Illinois-based truck maker in March paid a $7.5-million fine to the US Securities and Exchange Commission regulator after having lied about its engines' conformity with emissions rules in the early 2010s.
The VW announcement comes as the carmaker faces hefty costs and fines as a result of its own emissions scandal that engulfed the group about a year ago, affecting about 11 million VW diesel vehicles across the world.
Analysts with Germany-based DZ Bank said that the deal may be "a first step for VW to improve its footprint in the US," but that the company's commercial vehicles business was "far less important than its car business."
uhe/nz (dpa, AFP, Reuters)