VW’s Traton nears $3.7 billion deal for the rest of Navistar

Volkswagen AG’s heavy-truck unit is nearing an agreement to acquire the rest of Navistar International Corp. for $3.69 billion in a deal supported by billionaire investor Carl Icahn.

VW’s Traton SE is finalizing an agreement to purchase the rest of Navistar stock it doesn’t already own for $44.50 a share, the U.S. truckmaker said in a statement Friday. The transaction is supported by Icahn, Navistar’s largest shareholder, and MHR Fund Management, the hedge fund founded by Mark Rachesky.

Navistar shares surged as much as 21% to $42.97 shortly after the open of regular trading. The stock slumped earlier this week after Traton put out a surprise statement on Oct. 14 saying that its $43-a-share “best and final” offer would expire at 6 p.m. Central European Time today.

Bloomberg reported earlier that the companies were holding last-minute talks to reach a compromise on price, citing people familiar with the matter. CNBC reported first that they were nearing a deal at $44.50 a share.

Boosting the value of VW’s trucks unit has been a major priority for Chief Executive Officer Herbert Diess. Traton is in the midst of a major restructuring of its MAN unit and Diess called out the importance of acquiring Navistar in his address to shareholders at VW’s annual general meeting.

Adding Navistar, the maker of International branded trucks, to Traton’s portfolio will help VW to better take on sector leaders Daimler AG and Volvo AB. It currently has no direct access to the North American market, the industry’s largest source of profits, and instead relies on sales in Europe and Latin America.