NAV Navistar International Corp

By William Boston 

BERLIN -- Volkswagen AG said on Thursday that it would offer up to 15% of its truck unit Traton AG in a range of EUR27 ($30.5) to EUR33 a share, making the initial public offering worth up to EUR1.9 billion.

The share offering, which values all of Traton at about EUR16.5 billion, marks a long-awaited step by Volkswagen to begin chipping off some of the company's divisions no longer deemed necessary for maintaining the core business of building cars and offering new mobility services.

"We are well equipped for the decisive phase," Volkswagen Chief Financial Officer Frank Witter said. "The clear goal of the listing is to create additional value for our stakeholders."

Traton, one of the largest truck manufacturers in the world, earned EUR1.7 billion in pretax profit last year and generated EUR25.9 billion in sales revenue. Its business includes the brands MAN and Scania and it also has a 17% stake in Navistar International Corp., the U.S. truck maker, and a 25% stake in Sinotruk Ltd, the Chinese truck manufacturer.

Volkswagen has long struggled to achieve consensus among its core shareholders and labor leaders, who hold half the seats on the company's nonexecutive board, over the question of divesting itself of a unit that is no longer considered core business.

In a 2017 interview with The Wall Street Journal, former Volkswagen Chief Executive Matthias Müller said the company had compiled a list of such noncore businesses that together represented about 20% of the auto giant's total revenue.

The Traton offering is potentially the first of a number of divestitures that could be in Volkswagen's pipeline.

Volkswagen said that investors will have the opportunity to subscribe to Traton shares starting from June 17-27 and that shares would begin trading on June 28 on exchanges in Frankfurt and Stockholm. The final pricing of the offer will be determined on or around June 27 through book building.

Write to William Boston at william.boston@wsj.com

(END) Dow Jones Newswires

June 13, 2019 20:21 ET (00:21 GMT)

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