Volkswagen Plans To Buy Stakes in Navistar


Thread Starter #1
Joined
Feb 10, 2012
Messages
5,937
Likes
211
Location
bangalore
Volkswagen Ag, Europe’s largest carmaker is examining the possibility to take a stake in in troubled US truckmaker Navistar International, the Financial Times Deutschland reported on Sunday.

Without citing sources, the paper wrote that entering the U.S. market via Navistar would help it better compete with Daimler Trucks, the world’s largest commercial vehicle maker, which owns the U.S. truck brand Freightliner.
If Volkswagen wants to take a stake in Navistar, it may need to get the support of Icahn, who previously is said to have wanted Navistar to be merged with heavy truck manufacturer Oshkosh Corp.
On Friday, Icahn disclosed in a filing with the U.S. Securities and Exchange Commission that he had increased his stake in Navistar to 11.87 percent from 9.99 percent. Analysts said this indicates that the activist investor retains an interest in the future of the Lisle, Illinois-based company.
However, Navistar International Corp.’s stock plummeted Thursday as it reported a second-quarter net loss of $172 million, or $2.50 per share.
The company’s truck business recorded a loss of $89 million for the quarter from a $92 million profit a year earlier. The engine business had a $108 million deficit compared with a $2 million profit.
Also, last week Standard & Poor’s Ratings Services lowered its ratings on Navistar International Corp., including the corporate credit rating to ‘B+’, from ‘BB-’.

Besides VW AG, Fiat Chairman Sergio Marchionne on Friday suggested he was interested in Navistar.
“We are interested in building our presence in the U.S. truck market,” Marchionne told reporters when asked if Fiat was interested in bidding for Navistar.
Source:
VW plans to buy stake in US truckmaker Navistar

Will our Indian Mahindra be interested in this deal, as it will make it easier for them to enter US.
 

Attachments

Thread Starter #2
Joined
Feb 10, 2012
Messages
5,937
Likes
211
Location
bangalore
The betting among Navistar watchers is that something has got to happen.
Either the company has to be acquired, restructured and/or its board and/or management has to go.
This much is clear: Dealmakers, analysts and competitors smell blood, and management may be better off selling than risking being tossed out.
Investor Carl Icahn last week boosted his Navistar stake to 12 percent from 10 percent and in recent days names like Fiat and Volkswagen have surfaced as possible buyers of the company. JPMorgan's (JPM) Ann Duignan, in her upgrade of the stock to a neutral from underperform, mentioned the deal chatter and even trying to put a value on the company.
But in the end, Navistar (NAV) appears to be the classic case of yet another company whose highly touted, controversial efforts to shake up an industry backfired (this one, with quite the blast.)
In this case, the mistake was Navistar's veering from industry standard with a new engine technology that hasn't been able to get EPA certification and has led to costly warranty repairs. Last quarter, in part because of the warranty costs, Navistar reported an unexpected loss and for the second consecutive quarter guided well below expectations.
"The issue is a very simple one," says independent industry analyst Oliver Dixon of West End Companies." Navistar needs to produce a market ready, market acceptable and legally compliant engine, and it needs to do so quickly. This engine needs to work, and buyers need to buy it. If this does not happen, it will serve only to increase both the confusion that surrounds the company and questions regarding the credibility of its senior management."
Reality is: CEO Dan Ustian's credibility is already on the line, with Jefferies analyst Stephen Volkmann leading the charge on the company's recent earnings call.
"The simple question is, how long do you as CEO let this thing go on?" he asked. "You are losing market share. It's obviously starting to impact the core business. The warranties have been off the charts so even what you've got out there hasn't been working very well. There are other solutions to this problem that are fairly simple. And yet you guys just continue to take these punches to the gut. As CEO, at some point you have to decide how long this thing goes on."
Ustian responded: "We aren't losing market share, Steve. We aren't gaining any. We have to get this behind us and then we will turn this around and get this thing where it's going the other way. And that's what our target, to have us distracted into something else is probably not conducive to the longer-term objectives."
Yet while he was saying that, the company recently realigned top management below Ustian. Pointing out that those promoted are younger than he and his team are, Ustian told analysts: "Some succession throughout the company is in our thought process."
It goes deeper than that. A peek at page 25 of the company's slide show during the earnings call may be the biggest clue of all: The only jobs reporting to Ustian and his CFO A.J. Cederoth, who are tucked off in the corner of the slide, are "support functions."
The real question boils down to this: Will Ustian sell or leave? As JP Morgan's Duignan points out, he's better off personally if he sells. According to his contract, he would get $18 million if he loses his job because of a sale.
"On the other hand," Duignan points out, "should the CEO or other major officers be laid off due to performance reasons, the officers (including the CEO) would receive the only value of unused vacation and any vested stock options, with no cash severance."
My take: No brainer. And besides, it's better to see the fins while still on the ship rather than the life raft. Of course, with billions in pension and warranty liabilities there is no guarantee the ship won't sink first.

Will this affect their JV in India with M&M?
Will Mahindra jump into buy Navistar and enter US?

only time will tell i guess.

Are the Sharks Circling Navistar? - Yahoo! Finance
 
Thread Starter #3
Joined
Feb 10, 2012
Messages
5,937
Likes
211
Location
bangalore
Navistar tries to get US government approval for a new engine model that will be ready next year.

Initially Navistar was planning to manufacture a new generation diesel engine, but then changed his mind and announced it was developing another model. This change made investors’ shares drop 8% as analysts raised the problem of the costs for the transition to the new engine.
Navistar, known for producing the International brand school buses and heavy trucks, declared that the new engine will function with liquid urea that will cut nitrogen oxide emissions, a pollutant linked to asthma. But this move has been announced before by engine maker Cummins Inc and truck maker Paccar Corp.

“It fell short of my expectations,” said Morningstar analyst Basili Alukos of the move. “I was expecting or hoping for them to abandon their engine business completely and start buying from a third-party supplier.”
Investors began to question whether Navistar’s indecision concerning the engine strategy will make trucking companies less willing to purchase the company’s vehicles. In June Navistar faced a quarterly loss after it took a $104 million charge for warranty claims on engines that were sold in 2010 and 2011.
 
Thread Starter #5
Joined
Feb 10, 2012
Messages
5,937
Likes
211
Location
bangalore
mahindra is a already pissed off in home. mahindra-navistar trucks are market dud.
Not really, Mahindra truck's are doing decent number's,they are also increasing their production capacity to 50,000 unit's and by this year end they will start exporting it to S.African market.
 
Joined
Aug 24, 2011
Messages
2,637
Likes
187
Location
Pune
Not really, Mahindra truck's are doing decent number's,they are also increasing their production capacity to 50,000 unit's and by this year end they will start exporting it to S.African market.
But till date, I have seen only 1 truck on road.
 
Top Bottom