Volkswagen AG, through Traton SE, announced its plans to acquire Navistar International Corp.  Shares went up from $43 to $44.50 totaling about $3.7 billion. VW is a major shareholder with a 16.7% stake in Navistar. Currently, Carl Icahn is the biggest shareholder with 16.8%. And MHR Fund Management owns 16.4% of the company. Volkswagen will be in the process of purchasing the rest of the shares to declare full ownership.

Matthias Gründler, chief executive officer of Traton SEsaid that Traton had reached a consensus to go ahead with theacquisition. He added that they are currently carrying out a duediligence process. After it’s done they will finalize the purchase.Despite the challenges that are expected, the process is in the latter stages.

The addition of Navistar to Traton’s portfolio is a major boost. Navistar’s International brand trucks are a real deal in North America. The German manufacturer will present Traton with a chance to become a global competitor to the ‘big boys’ in the sector. So, the expansion would allow VW to expand profit margins in areas they had no access to initially.

Navistar’s International truck brand offers vehicles ranging from class 4 to 8. Back in 2017, the merger provided VW with access to improved technology bolstering purchases and market power. In addition, with the current merger, they will be able to even access more advanced technology and meet all demand requirements.

Inevitable challenges

Despite all the positivity surrounding the acquisition, challenges are inevitable. The entire business and operation integration will not be a walk in the park for Traton. In the past, attempts for Scania and Man to work together failed due to unsettled rivalries. The same had to come to an end with a bid to avoid the continued surge in losses. Also, Traton is in the process of coming to an agreement with Toyota Motor Corp's truck subsidiary Hino in Asia, to even gain more ground in the industry.