Volkswagen buys Navistar stake for $256 million in trucks push
By Edward Taylor
FRANKFURT (Reuters) - Volkswagen (VOWG_p.DE: Quote) has agreed an engine technology and purchasing alliance with truckmaker Navistar NAV.N and will buy a 16.6 percent stake in the U.S. firm for $256 million, as global truck makers face steep development costs to meet global anti-pollution rules.
The deal is expected to help both sides cut costs, give Volkswagen's trucks business a long-desired foothold in North America and provide a source of new engines for Navistar, which has been looking for a partner ever since its heavy-duty diesel truck engine failed get approval from U.S. regulators in 2010.
Volkswagen's next generation engine for MAN (MANG.DE: Quote) and Scania [SCVSA.UL] trucks will be adapted to suit Navistar's U.S. trucks at a time when global anti-pollution rules are converging, Volkswagen Trucks Chief Executive Andreas Renschler said on Tuesday.
"If emissions regulations are coming closer together, you can address this kind of technology question with the same concept, transmission and after-treatment system," Renschler said in a news conference call to discuss the deal.
Volkswagen can lower development costs through increased economies of scale, adding Navistar's 84,000 annual sales to its own 179,000 annual truck and bus sales.
To cement the new alliance Volkswagen will pay $15.76 a share for 16.2 million new Navistar shares, a 12 percent premium to Navistar's closing price on Sept. 2, the two groups said.
Volkswagen Truck & Bus will hold Navistar shares for a minimum of three years and top-level executives from both parties will align product development and procurement processes, the companies said.
Volkswagen could raise its stake in Navistar at a later point, Renschler said, adding that "all options are open" with Volkswagen's ambition to build a global trucks champion. Continued...