Representatives of Traton said on Friday that a final transaction would still need to be approved by its board, Volkswagen’s executive bodies, in addition to Navistar’s Board of Directors.
The news follows talks between Traton and Navistar that started in January, when the Volkswagen subsidiary offered to buy Navistar’s remaining shares for $35 per share in cash. That offer was later increased to $43 per share in September.
Volkswagen currently has a 16.8% stake in Navistar.
Traton earlier this week put a Friday afternoon deadline on buying the shares of Navistar that it did not already own for $43 per share in cash. Representatives of Traton said it represented their “best and final” offer.
Representatives of Navistar responded to Traton on Friday that it would be prepared to move forward with transaction for $44.50 per share in cash. That deal was supported by two of Navistar’s largest shareholders, American businessman Carl Icahn and MHR Fund Management.
On Wednesday, the same day that Traton implemented its deadline, the price of Navistar’s shares saw a dramatic decrease on the New York Stock Exchange. The price dropped by about 19% and closed at $36 per share Wednesday.
However, the stock went up almost 23% and closed at $43.52 per share Friday.
Traton announced on Friday that it reached an agreement in principle that the company would acquire by merger all shares in Navistar.
“We are pleased to have reached agreement in principle for a transaction after intensive negotiations with Navistar. We are looking forward to completing our due diligence and obtaining the necessary approvals in respect of this exciting deal in order to welcome the new Traton family member,” said Matthias Gründler, the CEO of Traton.
If the transaction takes place, it means that Traton will acquire Navistar for $3.7 billion. Local officials in Clark County say it is too early to tell what impact that deal will have in the area.
Navistar employs more than 1,000 people in Clark County and has a manufacturing facility in Springfield, which builds medium-duty trucks as well as cutaway vans for General Motors.
Clark County Commissioner Melanie Flax Wilt said that Navistar has had a major presence in the county for decades. She said that a lot of families in the area rely on employment from or have a connection to Navistar.
In regards to Traton’s deal to purchase Navistar for $3.7 billion, Wilt said “It is always important for us to have a relationship with the businesses here. Whatever we can do as a community to make the new owner feel welcome we will do that.”
Mike McDorman, the president and CEO of the Chamber of Greater Springfield, said: “We want (the Springfield plant) to continue to be here and to grow here. That is what we told Navistar and that is what we will tell anyone who takes over this operation.”
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