Market Overview

PreMarket Prep Stock Of The Day: Navistar

PreMarket Prep Stock Of The Day: Navistar

For what has been a fairly calm week for the markets, the opposite is true for shareholders of Navistar International (NYSE: NAV), making it the PreMarket Prep Stock Of the Day.

Been Around For A Long Time: It's difficult to give the long, long-term price history for the company since it was founded in 1902 and was originally known as the International Harvester Corporation until 1986. At that time, it was transformed into the holding company Navistar International, which operates as the owner of an international brand of trucks and diesel engines.

Gone Nowhere Since 2018: Navistar ended 2017 at $42.88. While the issue had a majority of its price action between $25 and $35 during this stretch, it got much cheaper in the March meltdown.

After ending 2019 at $28.94, it rallied in January to $36.62 and held up extremely well in February and during the early part of the retreat, ending the month at $36.31. However, the wheels came off the truck in March to $15.01. It matched that low in April and followed the broad market higher, ending September at $43.54.

Let’s Make A Deal In January: In January, Navistar confirmed the receipt of an unsolicited $35/share proposal from Traton SE for the remaining 83% of the company it did not already own and Navistar committed to reviewing the proposal. That news instigated a rally to $36.62 in the following session.

While the Street was still confident the deal would go through in February, it treaded water in the early stage of the market retreat. However, in March, Navistar was punished along with the remainder of the market, cratering to its lowest level since September 2016, when it bottomed at $13.30.

Markets Recover, So Do Prospects For The Deal: It took some time, but Navistar did recover back to the original takeover price, ending its Sept. 3 session at $35.28. On Sept. 10, the company received a revised proposal from Traton for $43/share. On that day, it rallied from $35.84 to $40.78 and reached the new proposed price two days later, when it ended the Sept. 14 at $43.02.

Over the next month, the Street speculated the deal may get done at a higher price and it traded as $45.35 and ended Tuesday's session at $44.46.

Traton Sets A Deadline And The Street Balks: On Wednesday, Traton set a deadline for the Navistor takeover bid for 12 p.m. ET on Friday. Apparently, many investors were unsure of the outcome and bailed out in the issue, skidding on Wednesday from $44.46 to $36 on heavy volume. Absent of substantial news on the deal on Thursday, the issue fell to $35.42.

Fooled You, Done Deal: Before the open on Friday, Navistar confirmed “it would be prepared to move forward with a transaction in which Triton would acquire Navistar for $44.50/share." And just like that, Navistar is right back at the area of Tuesday's close ($44.46), trading at the $43.50 area as if Noon.

PreMarket Prep Take On The Saga: Takeover deals can be complicated, although few are as complicated as this one, especially taking into account the market dynamics since the deal was originally announced.

By observing takeover deals over the years, often it seems prudent to ring the register once an issue reaches the proposed takeover price. Of course, one has to judge whether the offer will be sweetened, which can be monitored by news flow and price action; This turned out to be the case with Navistar.

However, ringing the register at the $44 area, where it traded for a month, could have saved investors a gut-wrenching few days, and or major regret if one bailed on the issue before the Friday deadline.



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