UPDATE: Volkswagen & Navistar - Gabelli Research Analyst Brian Sponheimer (4-13-2018)

UPDATE: Volkswagen & Navistar - Gabelli Research Analyst Brian Sponheimer (4-13-2018)

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Transcript:Yesterday, Volkswagen’s Supervisory Board confirmed long awaited speculation that it would be replacing CEO Matthias Muller with Herbert Diess, the CEO of the Volkswagen car brand.

The move was one of a series of major changes made by the board, with most headlines focusing on a restructuring of the company’s automotive group into several divisions, including a specialist China-focused group.

From our perspective, the most notable announcement was a confirmation that VW’s Truck and Bus division, which includes not only the VW brand but also heavy duty manufacturers Man and Scania, would seek to change its legal structure in a necessary step towards what Volkswagen calls “Capital market readiness.” News reports indicate that that the company may seek to sell a 25% stake through an initial public offering early in 2019.

We see these steps as critical moves towards an eventual purchase of Navistar, the Lisle, IL-based manufacturer of Internaional-branded trucks. Volkswagen took a $256 million, or 16.6% stake in the company in September of 2016, a stake that is now worth more than double that amount.

VW Truck and Bus CEO Andreas Renschler has made it no secret in his desire to make Volkswagen Truck and bus a “Global Champion” among other truckmakers. With no wholly-owned manufacturer of its own, Navistar fits incredibly well into VW’s plans.

The two companies are currently working on next generation engine, connectivity and electric truck technology, and we see a high likelihood of a full combination of the two in the not too distant future.

We recommend investor purchase NAV shares, with a 2019 Private Market Value of $49 per share that could grow significantly over time.

Thank you.



Source: Gabelli TV (via YouTube)
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