Navistar Surges 30% After Strategic Alliance With Volkswagen Truck & Bus
Navistar International Corporation (NYSE: NAV) shares surged after the company disclosed it established a wide-ranging strategic alliance with Volkswagen Truck & Bus. As a result, the company would get an investment of $256 million from Volkswagen at $15.76 a share. This would translate into 16.6 percent stake.
Aside from the equity participation, the tactical deal included strategic technology and supply collaboration apart from a procurement joint venture. Volkswagen Truck & Bus would get the right to name two directors following its equity participation.
Navistar indicated it sees considerable synergies from both the strategic technology collaboration and the procurement joint venture. The company expects cumulative synergies of a minimum of $500 million in the first five-year period. At the end of the fifth year, the alliance synergies would be a minimum of $200 million.
Volkswagen Truck & Bus CEO, Andreas Renschler, said, "We are now taking the next step on our way to becoming a Global Champion in the commercial vehicles industry. The strategic alliance with Navistar is an important milestone and will be very beneficial for both sides."
Navistar expects the alliance to position best-in-class products and services to customers.
Following the news, Navistar surged $3.93, or 27.93 percent, to $18.00 in the pre-market trading.
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.