Lisle-based truck maker Navistar International agreed Friday to sell itself to Traton, the truck division of Volkswagen, which will get long-sought access to North American customers as both companies share the cost of new technology.
The $3.7 billion deal is worth $44.50 per share and covers all but the 16.8% of Navistar that Traton already owns. It is subject to final reviews and approval from both companies’ boards.
Munich-based Traton said it would sweeten a previous offer of $43 per share to $44.50. Navistar Executive Chairman Troy Clarke said it would accept that price, and it advised Traton its two largest shareholders, activist investor Carl Icahn and MHR Fund Management, a hedge fund run by Mark Rachesky, support the sale.
Traton earlier this week had called the $43-a-share offer its “best and final” price that would expire Friday. With word of a tentative agreement, the price of Navistar shares soared nearly 23% in Friday’s trading to close at $43.52.
The sale would mark a new era for Navistar, which dates its history from Cyrus McCormick’s development of the mechanical reaper in 1831. As of late 2019, the company reported having 13,300 employees worldwide.
Navistar produces a full line of heavy-duty trucks, diesel engines and the IC Bus brand of school and commercial buses. Traton, with brands such as MAN and Scania, does its main business in Europe and Latin America. It has been looking for ways to gain business from larger competitors Daimler and Volvo.
“We are pleased to have reached agreement in principle for a transaction after intensive negotiations with Navistar,” Traton CEO Matthias Grundler said. “We are looking forward to completing our due diligence and obtaining the necessary approvals in respect of this exciting deal in order to welcome the new Traton family member.”
Both companies have been sharing costs in developing driverless technology, but they face ongoing pressure to invest in reducing emissions.
Traton reports having 82,700 employees worldwide. Aside from its Lisle headquarters, Navistar operates a testing and development center in Melrose Park and other sites in the U.S., Mexico and Brazil.