U.S. Markets closed

Navistar Gets $3.6B Buyout Offer From Traton, Shares Pop

Zacks Equity Research
·3 mins read

Navistar International’s NAV merger talks with Volkswagen’s VWAGY trucks arm Traton SE are gathering steam. Notably, Traton already owns around 17% stake in Navistar. Traton has boosted its takeover bid for the rest of the Illinois-based truck maker to $43 per share from $35 offered in January 2020. The revised offer values the portion of the stock that is not already owned by Traton at around $3.6 billion. Post the announcement of the sweetened offer by Traton, Navistar’s shares rallied around 13.8% yesterday to close the session at $40.78. 

Navistar-Traton merger talks had been heating up since January 2020 until the coronavirus outbreak put the deal into jeopardy. However, Volkswagen’s arm has resumed negotiations lately to acquire the rest of Navistar. The acquisition would enable Volkswagen to secure a strong position in the U.S. heavy-truck market — the largest market for the truck industry — and position it better than European peers including Daimler AG DDAIF and Volvo Group.

While Navistar’s board of directors and management team are currently evaluating the revised proposal of Traton, it wouldn’t come as a surprise if the latter hikes the bid again if the current offer goes unaccepted. Considering Volkswagen limited exposure in the North American truck industry and Navistar’s strong footing in the region along with impressive dealership networks, it would make sense for the Germany-based auto giant to make every effort to purchase the remaining shares of Navistar and become its sole owner. 

Notably, Navistar and Traton have been collaborating over the past couple of years to make developments in the electric vehicle technology in order to slash annual costs of both the companies by $200 million.Navistar is marching toward an electrified future aided by the company’s Next eMobility Solutions, in view of the target of launching medium-duty electric trucks by 2022.

Navistar currently carries a Zacks Rank #2 (Buy). Another top-ranked player in the auto space is the U.S. car giant General Motors GM, which sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Navistar International Corporation (NAV) : Free Stock Analysis Report
 
General Motors Company (GM) : Free Stock Analysis Report
 
Daimler AG (DDAIF) : Free Stock Analysis Report
 
Volkswagen AG (VWAGY) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research