Below is a script for Navistar
International Corporation’s (“Navistar’s”) discussions with
its employees, regarding frequently asked questions with respect to
proposed acquisition of Navistar by TRATON SE
(“TRATON”).
TRATON/NAVISTAR – AGREED TRANSACTION ANNOUNCEMENT – MASTER
Q&A
Overall / Strategic
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1. |
Why is TRATON acquiring
Navistar?
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This combination will create a global champion in commercial
vehicles with enhanced scale, a strong portfolio of best-in-class
brands, and a clear leader in cutting-edge products, technologies,
and services.
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TRATON will gain access to the North American truck and bus
market through Navistar’s expansive distribution network, strongly
complementing TRATON’s existing footprint, and the combined company
will be a global leader.
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Over the past four years, both TRATON and Navistar have
benefited from a highly collaborative and productive strategic
alliance on procurement and technology development.
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As we’ve worked together, we have recognized that there are
compelling strategic and financial benefits from a combination of
Navistar and TRATON. We see this as a logical next step in our
relationship.
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2. |
Why is Navistar entering into the
transaction now?
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The Navistar Board of Directors believes that TRATON’s offer
at $44.50 per share delivers compelling, immediate, and substantial
cash value to shareholders and is in the best interests of the
company, its shareholders and its other stakeholders.
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• |
After thoroughly reviewing a range of possible strategic
opportunities for maximizing value, Navistar’s Board of Directors
determined this transaction is in the best interests of the
company’s shareholders and other stakeholders.
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Combining our companies will create a global leader with
significantly enhanced prospects for product development and
financial performance.
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Over the past four years, both TRATON and Navistar have
benefited from a highly collaborative and productive strategic
alliance on procurement and technology development. The combination
is a logical next step in the TRATON-Navistar relationship and
builds off the success of the strategic alliance.
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3. |
How will this transaction be
different than the current strategic alliance?
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The strategic alliance was a successful partnership that
included an equity investment of 16.7% ownership of Navistar by
TRATON.
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This transaction will result in TRATON acquiring the remaining
outstanding common shares of Navistar for $44.50 per share.
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A full combination of the companies will allow both Navistar
and TRATON to pursue additional synergies beyond what was possible
in the strategic alliance, including additional cost savings, a
full integration of R&D capabilities and cost of capital
opportunities.
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Additionally, we see new revenue opportunities for growth in
products and services by leveraging Navistar’s extensive dealer
network.
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4. |
TRATON made its initial proposal on
January 30, 2020. Why has this transaction process taken so
long?
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These types of processes can often take some time, especially
when you factor in the global pandemic’s impact on the
macroeconomic and operating environment.
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We’re proud to have emerged from the pandemic stronger and
more resilient, having been able to accelerate Navistar 4.0 and
having realized some permanent SG&A savings, positioning us
well for a combination at this time.
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After thoroughly reviewing the revised proposal from TRATON in
consultation with its financial and legal advisors, the Board
determined this transaction was in the best interest of the
company, its shareholder, and other stakeholders.
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5. |
Do you expect any adverse reactions
from your customer base, dealer network or suppliers?
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This is a highly complementary transaction for both parties,
combining Navistar’s North American footprint with TRATON’s
presence mainly in Europe and South America.
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TRATON’s commitment, financial resources and capabilities will
strengthen Navistar’s position in core markets, which will result
in significant benefits for Navistar customers, dealers, and
suppliers.
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TRATON will leverage Navistar’s operations to pursue growth in
North America and related markets.
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We are excited about this transaction and are confident that
our key stakeholders will share our enthusiasm for what lies
ahead.
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6. |
Will the Company maintain the
Navistar name and brand?
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There are no changes planned at this time. Today it is
business as usual for Navistar.
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Closing / Next Steps
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7. |
When is the deal expected to
close?
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The transaction is expected to close in mid 2021 and is
subject to Navistar shareholder approval as well as customary
closing conditions and regulatory approvals.
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8. |
What are the next steps in the
transaction and what is the timeline for integration?
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The transaction is expected to close in mid 2021 and is
subject to customary closing conditions, including approval from
Navistar’s shareholders and the receipt of regulatory approvals
such as HSR and foreign country antirust approvals.
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Operationally, it is business as usual for Navistar until the
closing of the transaction. We will continue to support our
customers, dealers, and business partners throughout this process,
and we remain committed to delivering the best quality and
service.
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9. |
What regulatory approvals does this
transaction require and does Navistar see any challenges in
obtaining them?
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The transaction is subject to customary closing conditions,
including approval from Navistar shareholders and the receipt of
regulatory approvals such as HSR and foreign country antitrust
approvals.
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Financial / Investors
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10. |
How does this transaction compare
to past transactions in the sector from a price perspective?
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The Navistar Board of Directors firmly believes that TRATON’s
offer at $44.50 per share delivers compelling, immediate, and
substantial cash value to shareholders and is in the best interests
of the company and its shareholders and other stakeholders.
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11. |
Where are the synergies coming from
and how confident is TRATON in its ability to achieve them?
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Navistar and TRATON will create a complementary business with
significant synergy opportunities.
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The acquisition of Navistar will significantly leverage
TRATON’s positioning in North America, one of the biggest and most
profitable markets for heavy trucks. Together the companies can
enhance scale and reach in key markets as well as pursue
further synergies.
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12. |
Will Navistar remain listed on the
NYSE?
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No. Following the transaction close in mid 2021, Navistar will
be owned and operated by TRATON and will no longer be listed on
NYSE.
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13. |
Was this transaction pushed for by
one of Navistar’s major shareholders (e.g. Icahn or MHR)?
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Navistar’s Board of Directors has always been committed to
maximizing value for shareholders and the Board strongly believes
that a transaction with TRATON delivers compelling, immediate, and
substantial cash value to shareholders.
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After thoroughly reviewing a range of possible strategic
opportunities for maximizing value, the Board determined this
transaction was in the best interests of the company, its
shareholders, and other stakeholders.
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Icahn and MHR are supportive of the transaction and have
provided voting agreements pledging to support the transaction,
subject to customary exceptions, in their respective shareholder
capacities.
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Employees & Operations
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14. |
Will there be any layoffs at
Navistar as a result of the transaction?
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Operationally, it is business as usual for Navistar until
closing of the transaction. Supporting our customers, dealers, and
business partners is of the upmost importance, and we remain
committed to delivering the best quality and service.
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We expect Navistar will become an even more attractive
employer, with employees enjoying new opportunities.
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TRATON and Navistar have developed a close relationship over
the course of the strategic relationship, and we believe this
combination is appropriate from both a strategic and cultural point
of view.
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The benefits of the proposed transaction would not be
predicated on plant closures.
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The two companies complement each other in many areas.
Currently, TRATON has no presence in the North American truck and
bus market and will use this transaction to grow by utilizing
Navistar’s plants, dealers, and employees.
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15. |
How will union workers be
affected?
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Operationally, it is business as usual for Navistar until
closing of the transaction. Supporting our customers, dealers, and
business partners is of the upmost importance, and we remain
committed to delivering the best quality and service.
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TRATON currently has a unionized workforce and has a
well-established track record of working with, listening to and
respecting the rights of its workforce.
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16. |
Will this affect the Navistar
employee pensions or benefits?
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Existing retirement and benefit plans will continue.
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Navistar’s current compensation and benefit programs will
continue through closing and TRATON has committed to providing
substantially similar benefits for at least one year after the
transaction.
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17. |
What Navistar facilities will be
impacted? If there are closures, what is the timeline for
these?
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The benefits of this proposed transaction would not be
predicated on plant closures.
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Currently, TRATON has no presence in the North American truck
and bus market and will use this transaction to grow by utilizing
Navistar’s plants, dealers, and employees.
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18. |
What will happen to Navistar’s
headquarters in Lisle, Illinois?
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There are no changes planned as a result of the merger
announcement.
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19. |
How will this change day-to-day
operations?
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Operationally, it is business as usual for Navistar.
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Supporting our customers, dealers, and business partners is of
the upmost importance, and we remain committed to delivering the
best quality and service.
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20. |
Will this transaction change
Navistar’s business model?
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The combination is the logical next step in the
TRATON-Navistar relationship and builds off the success of the two
companies’ strategic alliance, which has been in place since
2017.
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• |
TRATON will gain access to the North American truck and bus
market through Navistar’s expansive distribution network, strongly
complementing TRATON’s existing footprint, and the combined company
will be a true global leader.
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21. |
Will Navistar stop making any of
its current products? If so, when?
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The combination will create opportunities for additional
business growth, not only in North America, but globally.
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The transaction will also provide Navistar with the financial
stability and strength to drive further investments in product,
technology, and markets, which will allow us to grow market
share.
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Today it is business as usual for Navistar.
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22. |
Will my base pay change?
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Navistar’s current compensation and benefit programs will
continue to be relatively similar through closing and for at least
one year after the transaction.
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23. |
What happens to the Annual and
Special Incentive Programs?
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The Fiscal Year 2021 Annual Incentive Plan recently
communicated with employees and the Special Incentive Program will
remain the same.
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24. |
What happens to our Long Term
Incentive Program?
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Previous Long Term Incentive Grants will be cash settled
either according to the original vesting schedule or accelerated at
closing.
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A detailed communication will be prepared for Long Term
Incentive program participants prior to closing.
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25. |
How will Navistar’s culture change
as a result of this?
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TRATON has worked closely with Navistar for nearly four years,
and they know Navistar and our employees well. Our goal is to
continuously improve what we do and how we do it, and this includes
our culture, so we look forward to any opportunities that might
arise.
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Being a European company TRATON will have different culture,
governance and norms. We will learn about each other over
time.
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26. |
Will we still be able to hire new
employees?
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Continuing our talent management processes are critical to the
success of our business. Consistent with our normal course of
business and with customary approval processes, we can continue our
hiring processes.
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Customers
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27. |
What does this transaction mean for
Navistar customers? Will there be any changes in existing
contracts?
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The combination will create new opportunities for business
growth, including accelerating Navistar’s Vision 2025 customer
experience, increasing scale for advanced vehicle technologies and
business models, and securing sustainable strength for Navistar
through the combined company’s stronger balance sheet.
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Customers in particular will have new opportunities including
increased access to world-leading technologies in internal
combustion engines and safety and emerging technologies such as
autonomous and electrification.
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Suppliers
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28. |
What type of opportunities will
this transaction present for suppliers?
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The combination will create opportunities for additional
business growth, not only in North America, but across the
globe.
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The transaction will also provide Navistar with the financial
stability and strength to drive further investments in product,
technology, and markets, which will allow us to aggressively grow
market share.
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29. |
Will there be any complications for
suppliers as a result of the transaction?
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Operationally, it is business as usual for Navistar.
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30. |
Is Navistar concerned that its
current suppliers will end their contracts [early / before Navistar
is ready to switch over to using TRATON’s supplier network]?
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No. The combination will create opportunities for additional
business growth, not only in North America, but globally.
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The transaction will also provide Navistar with the financial
stability and strength to drive further investments in product,
technology, and markets, which will allow us to grow market
share.
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31. |
Navistar extended its long-term
partnership with Cummins in August 2020. What will the transaction
mean for this agreement? What will it mean for similar agreements
Navistar has with suppliers?
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There are no changes to existing contracts as a result of the
merger announcement.
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Dealers
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32. |
What types of opportunities will
this transaction present for dealers?
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TRATON will provide Navistar with access to world-leading
advancements in engine development and safety and emerging
technologies, including autonomous and electrification.
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Navistar will have more opportunities to leverage advanced
vehicle technologies and business models as well as increased
access to a global manufacturing footprint and supplier base.
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The combination will create new opportunities for business
growth and securing sustainable strength through the combined
company’s stronger balance sheet.
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TRATON’s financial resources and capabilities will strengthen
Navistar’s position in core markets, provide added resources to
invest and grow Navistar’s business.
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33. |
Will there be any complications for
dealers as a result of the transaction?
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Operationally, it is business as usual for Navistar.
Supporting our customers, dealers, and business partners is of the
upmost importance, and we remain committed to delivering the best
quality and service.
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Additional Information and Where to
Find It
This communication may be deemed to
be solicitation material in respect of the proposed acquisition of
Navistar by TRATON. In connection with the proposed
acquisition, Navistar intends to file relevant materials with the
SEC, including a proxy statement on Schedule 14A. INVESTORS
AND STOCKHOLDERS OF NAVISTAR ARE URGED TO READ ALL RELEVANT
DOCUMENTS FILED WITH THE SEC, INCLUDING NAVISTAR’S PROXY STATEMENT,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
ACQUISITION. Investors and stockholders of Navistar will be
able to obtain the proxy statement and other documents filed with
the SEC (when available) free of charge at the SEC’s web site,
http://www.sec.gov. The proxy statement is not
currently available.
Participants in the
Solicitation
Navistar, TRATON and their
respective directors and executive officers may be deemed to be
participants in the solicitation of proxies from Navistar’s
stockholders in respect of the proposed acquisition.
Information about the directors and executive officers of Navistar
is set forth in the proxy statement for its 2020 annual meeting of
stockholders, which was filed with the SEC on January 6, 2020, and
in the Company’s Annual Report on Form 10-K for the fiscal year
ended October 31, 2019, which was filed with the SEC on December
17, 2019. Other information regarding the participants in the
proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the proxy statement and other relevant materials to be filed with
the SEC in respect of the proposed transaction when they become
available.
Forward-Looking Statements
Certain statements in this
communication, that are not purely historical, may constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act
of 1934, and the Private Securities Litigation Reform Act of 1995,
each as amended. Forward-looking statements provide current
expectations of future events and include any statement that does
not directly relate to any historical or current fact. Words
such as “anticipates,” “believes,” “expects,” “intends,” “plans,”
“projects,” or other similar expressions may identify such
forward-looking statements.
Actual results may differ
materially from those discussed in forward-looking statements as a
result of factors, risks and uncertainties over which Navistar has
no control. These factors, risks and uncertainties include,
but are not limited to, the following: (i) conditions to the
completion of the proposed acquisition, including stockholder
approval of the proposed acquisition, may not be satisfied or the
regulatory approvals required for the proposed acquisition may not
be obtained on the terms expected or on the anticipated schedule;
(ii) the occurrence of any event, change or other circumstance that
could give rise to the termination of the merger agreement between
the parties to the proposed acquisition; (iii) the effect of the
announcement or pendency of the proposed acquisition on Navistar’s
business relationships, operating results, and business generally;
(iv) risks that the proposed acquisition disrupts Navistar’s
current plans and operations and potential difficulties in
Navistar’s employee retention as a result of the proposed
acquisition; (v) risks related to diverting management’s attention
from our ongoing business operations; (vi) potential litigation
that may be instituted against Navistar or its directors or
officers related to the proposed acquisition or the merger
agreement between the parties to the proposed acquisition; (vii)
the amount of the costs, fees, expenses and other charges related
to the proposed acquisition; and (viii) such other factors as are
set forth in Navistar’s periodic public filings with the SEC,
including but not limited to those described under the headings
“Risk Factors” and “Forward Looking Statements” in its Form 10-K
for the fiscal year ended October 31, 2019, its quarterly report on
Form 10-Q for the period ended April 30, 2020, and in its other
filings made with the SEC from time to time, which are available
via the SEC’s website at www.sec.gov.
Forward-looking statements reflect
the views and assumptions of management as of the date of this
communication with respect to future events. Navistar does
not undertake, and hereby disclaims, any obligation, unless
required to do so by applicable securities laws, to update any
forward-looking statements as a result of new information, future
events or other factors. The inclusion of any statement in
this communication does not constitute an admission by Navistar or
any other person that the events or circumstances described in such
statement are material.
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