Jun 14, 2019 OEM
The Volkswagen Group has announced that it will try to raise up to €1.9 billion ($2.1 billion) by floating a stake of at least 10% in its Traton truck unit late in June.
This is the carmaker’s second attempt to bring the business to market and it intends to offer stock in Traton, which sells MAN and Scania vehicles, for €27-33 per share, it said in a statement on June 13. The sale values the division at €13.5-16.5 billion.
VW has said that it plans to invest the proceeds in transforming its passenger car development and production as it readies the launch of dozens of electric vehicles over the coming years, part of which could be continuing to develop its alliance with Ford.
It is also seeking to capitalise on the premium that truck stocks command over automakers to create an acquisition currency, having earlier shown interest in potentially boosting its 16.8% stake in US truck maker Navistar. Management has denied that a Navistar deal is in immediate prospect, but such a move would fit with an attempt by VW to shift business toward the US, to balance its reliance on China, where it sells half its cars.
Besides Swedish heavy-truck specialist Scania and Germany’s MAN, Traton includes a smaller operation in Brazil that sells VW-branded commercial vehicles for emerging markets.
VW surprised investors last month when it revived its effort to float Traton just weeks after shelving the plan in March.
The sale will be seen by the financial markets as a test of not only demand for IPOs, in a European stock market that turned in its worst month in 3 1/2 years during May, but also for the ability of VW’s management to push through deeper structural change.
“We are now all set for the decisive phase,” VW Chief Financial Officer Frank Witter said in the statement. “The IPO is driven by the aim to create value for our stakeholders.”
The base offer will be 50 million shares, with a possible over-allotment of as many as 7.5 million shares, subject to the use of a so-called greenshoe option for rights to additional stock, VW said.
Trading is set to start on June 28 and the company is targeting an open flotation of 10-11.5% of Traton’s shares. This is in contrast to its earlier stated ambition of offering as much as a quarter of the unit’s shares to the market.
The offer period for the share sale is set to begin on June 17 and end on June 27.
VW CEO Herbert Diess, who took over the job a little more than a year ago, earlier Thursday addressed 500 top executives near VW’s corporate headquarters in Wolfsburg, Germany, and stressed the urgency of his push to make the transportation giant less centralised and more agile to navigate an unprecedented industry transformation.