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Volkswagen's (VWAGY) TRATON Completes Merger With Navistar

Volkswagen’s VWAGY trucks arm TRATON has finally completed the merger agreement with Navistar International. Navistar-TRATON merger talks had been heating up since January 2020 until the coronavirus outbreak put the deal into jeopardy. After much negotiation, TRATON acquired the remaining shares of the Illinois-based truck maker at $44.5 per share in cash. The deal — which was approved by shareholders of Navistar on Mar 2, 2021 — is worth $3.7 billion.

Notably, Navistar and TRATON have been collaborating over the past couple of years to make developments in the electric vehicle (EV) technology in order to slash annual costs for both the companies. The merger has strengthened the combined entity’s standing in the truck market, positioning it to cater better for electric and autonomous future of the auto industry.

The acquisition would enable Volkswagen to secure a strong foothold 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. Considering Volkswagen’s limited exposure in the North American truck industry, and Navistar’s strong footing in the region along with impressive dealership networks, the deal is set to significantly boost TRATON’s prospects. The deal in fact marks a major milestone in TRATON’s expansion plans.

TRATON is now contemplating to expand to Asia, especially in China, in sync with its plans to broaden global reach. TRATON’s Scania brand is set to establish a facility in Shanghai, with the production of trucks commencing next year. The factory will also house research and development activities. TRATON is already collaborating with Toyota’s TM truck unit Hino to develop electric and fuel cell vehicles as well as common EV platforms including software and interfaces.

Volkswagen currently carries a Zacks Rank #3 (Hold). CNH Industrial CNHI is a better-ranked player in the same industry, sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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