VW CFO Open to Taking Over Navistar

April 16, 2018
Volkswagen is signaling willingness to take over Navistar

Volkswagen's Truck & Bus unit paid $256 million for a 16.9 percent stake in Navistar in 2016 and is now signaling willingness to take over the rest of the Illinois-based company.

“(Taking over Navistar) would make sense at some point,” Matthias Gruendler, the finance chief of VW truck and bus, told reporters last Thursday. A takeover would require between 3 and 4 billion in extra costs, Gruendler said. Navistar is valued at about $3.66 billion.

The Wall Street Journal reported that officials of the truck unit were considering a full takeover. Talking to reporters Monday, Volkswagen Trucks CEO Andreas Renschler suggested a full takeover of Navistar would be “a good idea” as the company builds out its global strategy ahead of a possible public offering.

Volkswagen commercial vehicle division currently holds 16.9 percent of Navistar. If VW raises its stake in Navistar to over 17 percent, U.S. securities law requires VW to make an offer for the rest of the company.

According to Bloomberg.com, Gruendler said any purchase could be funded by parent Volkswagen and not depend on an initial public offering that the truck unit is considering.

Andreas Renschler, head of Volkswagen Truck & Bus, outlined global growth plans that included adding sales in China and sharing costs across its MAN, Scania and Brazilian VW commercial-vehicle operations through joint procurement and development of parts. Capital-market preparations will take 12 months, and the MAN Diesel & Turbo engines unit will be shifted to the parent company. Last week VW Truck & Bus unit signed an agreement with Toyota's Hino division

 “This comprehensive project will accelerate the transformation of our company” into “a true global champion, and will quickly make it ready for the capital markets,” Renschler said at the press conference..

Possible IPO

Renschler said no decision has been made for the truck division's rumored IPO but did say an IPO for the truck and bus unit “is just one of the options” the division is considering to gain financing, adding that another would be to sell bonds. “It’s ultimately a decision for our shareholders.”

The Volkswagen truck division’s preparations for an IPO or a debt sale would take 12 months, and MAN’s Diesel & Turbo engine and Renk industrial-equipment units will be shifted from the business to parent Volkswagen, the company said.

VW Chairman Hans Dieter Poetsch told reporters on Friday the auto manufacturer will retain a controlling stake in the commercial-vehicle business and that a share sale might not happen until 2019, as it still requires final approval.

Renschler also said he plans to sell more engines to equipment makers. “The off-highway business is very important for us as it enables us to sell commercial vehicle engines with very few changes to our partners,” Renschler said.

The Kostenkiller

Last week, Volkswagen AG replaced CEO Matthias Muller with Herbert Diess, part of a major corporate overhaul. Diess brings an outsider's perspective to the job, having joined Volkswagen in July 2015 after spending nearly two decades at rival German automaker BMW. It was there that Diess reportedly earned the nickname "Kostenkiller" -- or the cost killer -- for his ability to slash spending.

CNN.com reported Diess wants to make Volkswagen the leading manufacturer of electric cars, setting a goal of selling 1 million VW-branded electric cars by 2025.

"In a phase of profound upheaval in the automotive industry, it is vital for Volkswagen to pick up speed and make an unmistakable mark in e-mobility, the digitalization of the automobile and transportation as well as new mobility services," he said in a statement.

At the press conference on Friday, he said Volkswagen would be open to forming new partnerships with other companies to hasten the development of fuel cells and autonomous cars.

VW plans a new management structure that will see executives manage multiple brands at the same time. The company's brands, which include Audi, Porsche, Skoda and Lamborghini, will be grouped into the broad categories of "volume," "premium" and "super premium."