Volkswagen’s commercial truck unit, Traton, has made an unsolicited $2.9 billion cash offer to take over the Lisle-based truck manufacturer Navistar International.
Traton, which owns 16.8% of Navistar, offered $35 per share Thursday to buy the rest of the company, in a bid to form one of the world’s largest truck manufacturers and increase the German automaker’s commercial foothold in the U.S.
“The proposed transaction would create a leader in commercial vehicles with global scale and a strong portfolio of leading brands and cutting-edge products, technologies and services while delivering immediate and substantial value to Navistar stockholders,” Traton CEO Andreas Renschler said in a news release.
Navistar confirmed receipt of the offer in a separate news release Thursday and pledged to “carefully review and evaluate” the proposal to determine the best course of action for the company and its stakeholders.
A leading truck supplier in Europe and South America, Traton has had a strategic alliance with Navistar for three years. The proposed merger would give the combined company global reach and “enhanced ability” to develop emerging technologies, Renschler said.
Traton said it expected the proposed transaction to close by the end of the year, and that as a “significant stockholder” of Navistar, it would not “support an alternative transaction.”
Navistar, formerly known as International Harvester, has deep roots in Chicago. In the 1850s, agricultural machinery pioneer Cyrus McCormick opened his first factory in Chicago and built a dealer network to sell his mechanical reaper, which revolutionized farming. In 1902, International Harvester was formed from the merger of McCormick Harvesting Machine and Deering Harvester, with the combined company branching out into automobile, tractor and truck manufacturing.
International Harvester ran into financial troubles in the 1980s, discontinuing its Scout lines of consumer trucks and selling its agricultural business to focus on building commercial trucks. The retooled company took the name Navistar in 1986 and has remained a leader in commercial truck manufacturing.
Navistar has grappled with the fallout from allegedly defective engine emissions systems in certain 2011 to 2014 model year International commercial trucks. In January, a Chicago federal judge gave initial approval to Navistar’s agreement to pay truck owners and lessees $135 million to settle a class-action lawsuit covering more than 66,500 affected trucks.
The largest stakeholder in Navistar is New York-based activist investor Carl Icahn, who owns nearly 17% of the company’s outstanding shares.
Navistar’s stock closed at $36.59 per share Friday, up more than 52% from Thursday’s closing price.