Volkswagen takes $256 million Navistar stake in trucks push

[September 06, 2016]  FRANKFURT (Reuters) - Volkswagen  has agreed to supply engines to U.S. truck maker Navistar in exchange for a 16.6 percent stake, an alliance forged in part by the need to meet stringent emissions regulations in the United States.

With few potential partners to choose from, Navistar is tying is fortunes to Volkswagen, which through its acquisition of MAN and Sweden's Scania [SCVSA.UL] has amassed global truck engine expertise, despite the scandal surrounding the German company's cheating of emissions tests in diesel cars.

Wolfsburg-based Volkswagen will pay $15.76 a share, a 12 percent premium to Navistar's closing price on Sept. 2, to buy new shares in the U.S. company, the two groups said on Tuesday.

U.S. regulators last month announced new environmental standards designed to cut greenhouse gas emissions from medium and heavy-duty trucks by up to 25 percent by 2027, adding pressure on Lisle, Illinois-based Navistar to seek a technology partner.

As part of the deal flagged by Reuters on Monday, Volkswagen and Navistar will also launch a joint venture for procurement, which Navistar said would help it reach synergies of at least $500 million over the first five years.

A Volkswagen logo adorns a sign outside a dealership for the German automaker located in the Sydney suburb of Artarmon, Australia, October 3, 2015. REUTERS/David Gray/File Photo

By year five, it expects the alliance to generate annual synergies of at least $200 million for Navistar, which could rise further as the companies continue to introduce technologies from the collaboration.

(Reporting by Maria Sheahan; Editing by Harro ten Wolde and Mark Potter)

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