Navistar and Volkswagen Roll on Broad Strategic Alliance

Navistar International Corporation has announced that it has formed a wide-ranging strategic alliance with Volkswagen Truck & Bus, which includes an equity investment in Navistar by Volkswagen and framework agreements for strategic technology and supply collaboration and a procurement joint venture.

In terms of specifics:

Volkswagen Truck & Bus is taking a 16.6% stake in Navistar

Volkswagen Truck & Bus to invest $256 million in Navistar at $15.76 per share and have the right to appoint two directors to Navistar’s board of directors

For its part, Navistar said that it “expects to realize cumulative synergies of $500 million over first five years.”

The alliance will also strengthen Navistar’s liquidity position. In addition, the procurement joint venture is expected to leverage the purchasing power of Volkswagen Truck & Bus’s three major truck brands, Scania, MAN and Volkswagen Caminhões e Ônibus, in addition to Navistar’s own International® and IC Bus brands, providing Navistar with enhanced global scale.

By year five, Navistar reported that it “expects the alliance will generate annual synergies of at least $200 million for Navistar.”

Navistar will remain an independent truck, bus and engine company, focused on providing top products and related services to its customers globally.

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