Navistar officials reviewing proposal that seeks to buy the company for $2.9B

Credit: DaytonDailyNews

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Navistar to lay off 106 workers in Springfield

Credit: DaytonDailyNews

The board of directors for Navistar International Corp. is reviewing a proposal from Volkswagen’s commercial truck unit, Traton, which seeks to buy the remaining shares of the truck manufacturer for $2.9 billion.

Traton offered to purchase those shares for $35 per share in cash, according to a letter from Navistar CEO Troy Clarke that was sent to employees on Thursday.

“While we don’t have any further detail to share at this time, we will make every effort to keep you informed as information becomes public,” Clarke said in the letter.

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However, representatives of Navistar said in a news release that “there can be no assurance that any negotiations between Navistar and Traton regarding this proposal will take place.”

“The most important thing for us as a community is that we retain the jobs and the economic impact of Navistar no matter who the owner is,” Clark County Commission President Melanie Flax Wilt said of the recent news.

“Navistar has been important to our community’s culture and to the social fabric of Clark County. Many families have moved here due to opportunities at Navistar,” she said.

The company also advised its shareholders to not take any action and that no shareholder vote is required at this time.

Bloomberg reported that billionaire investor Carl Icahn is the biggest holder of Navistar shares. The Lisle, Illinois-based company builds International-brand trucks, school buses, defense vehicles and engines. That news organization also reported that shares of Navistar soared as much as 56% to $37.48 on Friday.

Traton currently owns 16.8% of Navistar, according to Bloomberg.

“If such negotiations do take place, there can be no assurance that any transaction with Traton will occur or be consummated,” representatives of Navistar said in an official statement from the company.

The news comes at time when Navistar planned to lay off five more workers at its Springfield plant, which builds medium-duty commercial trucks as well as cutaway vans for General Motors.

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Those layoffs occurred on Friday and are a result of the company's decision to reduce the number of trucks built at the plant per day from 97 to 70 at the beginning of this year. The company also previously laid off 132 people at the plant in January due to the reduction in trucks.

The News-Sun reported in 2019 that the number of medium and heavy-duty trucks being built has surpassed demand nationally. Some companies are beginning to adjust their production rates as a result.

“In order to realign production with the current demand for our products, we will be adjusting line rates at our Springfield Assembly plant. This action is normal due to the cyclical nature of our business,” said Navistar spokesperson Lyndi McMillan in an email to the News-Sun in January.

An additional 218 workers were laid off from the plant between September and December of last year.

Those layoff figures only relate to members of UAW Local 402, which represents assembly production workers as well as those in skilled trades at the Springfield Plant.

The last decade has been a turbulent one for the company in the area, as its Springfield plant went down to as few as 300 workers in 2010. However, that number has rebounded in recent years as the truck maker restructured and shuttered other facilities to cut costs and become more efficient. In 2018, the News-Sun reported that the Springfield Plant had close to 2,000 workers there.

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Navistar reported a net income of $221 million for the 2019 fiscal year and revenues of $11.25 billion. However, the company predicted lower revenues for 2020, expecting to make between $9.25 billion and $9.75 billion by the end of the year.

“The chamber has very little relationship with Navistar at this time. The company has not been engaged in our community for some time now,” said Mike McDorman, the president and CEO of the Chamber of Greater Springfield.

“We do however, have a very good relationship with the local UAW here. The chamber would like to see laid off workers reinstated and this facility to see continued investment and growth in the future,” he added.

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