The heavy-truck division of Volkswagen AG has set a deadline for Navistar International Corp. to accept its takeover bid.
In a move that has increased pressure on the U.S. manufacturer to decide on a $3.6 billion deal, VW’s Traton SE unit said that its $43-a-share offer would expires at 6 p.m. Central European Time (early tomorrow morning in Australian) and would be withdrawn unless it’s notified of a willingness to proceed.
Navistar, which recently announced it would no longer be building the ProStar heavy duty truck, signaled last month it would seek a higher bid than what has been offered by Traton.
In a letter to its board of directors Traton said the price represented the best and final offer.
A Navistar spokeswoman said the manufacturer is mulling a response and next steps even as its shares plunged 21 per cent to $35, bringing it in line with the initial offer made in January by Traton.
“The deal makes sense for both Traton and Navistar, considering their respective position and strategic ambition,” said Roman Mathyssek, a Munich-based consultant at Arthur D. Little GmbH.
“The offer from Traton might be the last chance for Navistar to become part of a large global manufacturer.”
VW purchased its initial stake in Navistar in 2017. Acquiring Navistar is viewed as a major advance in challenging market leaders Daimler AG and Volvo AB on a global scale.
Its Traton unit has no direct access to the North American market, the industry’s largest source of profits, and relies heavily on sales in Europe and Latin America.
The group comprises Swedish heavy-truck specialist Scania, Germany’s MAN and a smaller business in Brazil that makes commercial vehicles for emerging markets.
Billionaire investor Carl Icahn is Navistar’s largest shareholder with a 16.8% stake, followed by VW with a 16.7% holding. Its third-largest shareholder is MHR Fund Management, the hedge fund founded by Mark Rachesky.
Navistar in turn has little presence outside North America and is much less profitable than peers including Paccar Inc.
An ill-fated engine strategy and accounting irregularities in the past have compounded its struggles.
VW folded its truck operations into Traton and sold a 10 per cent stake in an initial public offering last year.