Traton, Volkswagen AG’s commercial truck division, is set to close on its merger with Navistar International on July 1, after receiving all necessary regulatory approvals, the two companies announced on June 30.
Lisle, Illinois-based Navistar—founded as International Harvester Co. in 1902—will join Traton brands Sania, MAN, and Volkswagen Caminhões e Ônibusbrands to create one of the world’s largest truck manufacturers. The deal also gives the Volkswagen company presence in the competitive North American commercial vehicle market.
Germany-based Traton will also take over a Classes 6-8 truck manufacturing facility scheduled to open next year in San Antonio, a growing eMobility division, and an established partnership with leading engine maker Cummins (the two are collaborating on a fuel cell electric truck) and expanding relationship with self-driving truck startup TuSimple. Traton will also own IC Bus.
“Together, we will have an enhanced ability to meet the demands of new regulations and rapidly developing technologies in connectivity, propulsion, and autonomous driving for customers around the world," Traton CEO Matthias Gründler said in a statement when the acquisition agreement was first reached in October 2020.
Traton finalized the nearly $3.7 billion deal in November 2020 to acquire all outstanding common shares of Navistar—that it did not already own—for $44.50 per share in cash. Navistar stockholders approved the sale on March 2. The stockholders also approved two nonbinding proposals regarding executive compensation arrangements, the election of Navistar directors, and the ratification of Navistar's independent registered public accounting firm.
This May, Traton announced it opened 2021 with its best quarter on record thanks to more than 81,000 vehicles orders between January and March, a 50% increase in orders over the previous quarter. While its bus orders declined in the first quarter, which the company blamed on the COVID-19 pandemic, truck orders were up 62% to start 2021. Nearly 79,000 of the new orders were for trucks.
“A year ago, we saw how quickly the pandemic hit the commercial vehicle business,” Gründler said in May. “Now, we are seeing our customers’ orders pick up again just as quickly. One of the reasons for this is how well our new truck generations have been received by our customers.”
In the same 2021 Q1 report, Traton forecasted its operating return on sales to range between 5% and 7% and expects a net cash flow in industrial business to range between €500 million and €700 million ($593 million and $830 million) in 2021. This forecast, however, did not include the pending takeover of Navistar.
This year, Navistar increased its production line rates in all of its vehicle assembly plants, including adding a second shift to its truck assembly plant in Escobedo, Mexico, the OEM announced in June. But the pace of the increases has been slower than planned due to supply chain constraints.
"We delivered strong operating results in our second quarter," Persio Lisboa, CEO of Navistar, said June 8. "The strong trucking industry, fueled by robust economic growth, is supporting higher order activity by our customers, and our team is working hard to overcome the supply chain challenges to best support their transportation needs."
In 2021 Q2 (February through April), Navistar’s truck segment net sales were $1.5 billion, a 7% increase over 2020 Q2. The OEM credited the increase to higher used truck volumes, higher sales of GM branded units and higher Mexico volumes.
Along with Navistar’s new San Antonio factory, it is expanding its Huntsville, Alabama, engine facility, scheduled to open in early 2023.
"Guided by our Navistar 4.0 strategy and fueled by the hard work of our team, Navistar is capitalizing on the strong demand in the industry today," Lisboa said earlier this month. "This, together with the many opportunities available to us when our merger with Traton is complete, leads to a very exciting future for our company, our customers, and all of our stakeholders."
