Navistar International Corp. (NYSE:NAV) will open its books to TRATON, which is offering $3.6 billion to take over the truck maker.
In a statement Monday, Navistar's board said it "has unanimously concluded that while TRATON's revised proposal of $43 per share significantly undervalues" the maker of medium- and heavy-duty trucks and school buses, "It does represent a starting point for further exploring the possibility of a transaction."
In other words, Navistar will keep talking with TRATON.
Years of speculation
A TRATON takeover of Navistar has been the subject of speculation for years. The holding company for Volkswagen AG's truck brands purchased 16.6% of Navistar in 2016, TRATON on Jan. 30 offered $2.9 billion for the 83% of Navistar it does not already own. Navistar said it would study the proposal but said nothing more.
Volkswagen said last Thursday it would cover the $700 million bump in TRATON's offer — and indicated it was willing to go higher.
"TRATON has developed a strong strategic relationship with [Navistar] in recent years," Navistar's statement said. "The board believes the best way for TRATON to appreciate the true value of a potential combination is to allow it to conduct due diligence and engage in further synergy discussions."
TRATON's strategic interest in Navistar is access to the North American market. Volkswagen rivals Daimler Trucks and Volvo Group are well established. Navistar opened the door a crack in October 2019 when it said Navistar dealers would sell mining equipment from TRATON's Scania brand in Canada.
Navistar and TRATON work together on powertrains and purchasing. And TRATON had significant influence in Navistar's new assembly plant scheduled to open in San Antonio in the spring of 2022.