Navistar Says It May Bid For Mack

[kscarbel2]

Chicago Tribune  /  July 20, 1990

Navistar International Corp. said Thursday that it might bid competitively for financially ailing Mack Trucks Inc.

Navistar said it might exceed the $6-a-share tender offer for Mack made July 6 by Renault Vehicules Industriels (RVI) that expires August 8.

Renault owns 44.5 percent of Mack’s 29.7 million shares.

A Navistar spokesman said it would not make a firm offer for Mack until it completed a due diligence review, which would take about 10 days.

The spokesman acknowledged that “it would not be possible to effectively proceed with the offer without the approval of . . . Mack’s board of directors and a decision of the Renault Group to dispose of its investment in Mack.”

In a statement, Mack said that Renault has advised Mack’s board that it “has no interest in disposing of its investment in Mack.”

The developments come at a troubled time for U.S. truckmakers. Allentown, Pa.-based Mack Thursday reported a loss of $63.3 million on sales of $400.9 million in its second quarter.

Mack Trucks, which controls 13 percent of the U.S. truck market, also had to request an extension to December 31 of Friday’s maturity of its revolving credit agreement with a syndicate of banks led by Citibank and Credit Lyonnais` New York branch.

The company said its latest financial results violated the terms of the agreement and, without the extension, its banks could force the firm to repay the entire amount due.

Navistar, which sells 24 percent of all trucks bought in the U.S., also has been hit by the downturn in truck sales, which are off about 16 percent from a year ago. The truckmaker lost $10 million on $1.9 billion in sales in the first half of its fiscal year, which began Nov. 1.

Some analysts questioned the wisdom of a Navistar bid for Mack. “There’s some logic to it, but it doesn’t give them the diversification they’ve talked about now for three years,” said Steven Colbert, analyst for Prudential-Bache Securities Inc.

“What are they going to do with all that Mack capacity? They’ve got too much,” he said.

Mack makes over-the-road freight-hauling trucks in Winnsboro, S.C., and off-highway construction and garbage trucks, or vocational vehicles, in Macungie, Pa. The firm also has a small truck manufacturing facility in Oakville, Ontario.

Navistar, though based in Chicago, does all its assembly at a Springfield, Ohio, plant. It makes only over-the-road trucks.

Antitrust approval of a deal with Navistar could be a problem. The combined firms would have nearly 40 percent of the U.S. truck market.

“Maybe they could get the Justice Department to let them take just the Macungie plant,” said Colbert. “Mack is making money there and has a dominant share of the (vocational vehicle) market.”

Ralph E. Reins, Mack chairman, said that a special committee of the board appointed to evaluate the Renault offer also would study a Navistar offer and report back “in due course.”

[Lmackattack]

Mack had 13% in 1990 ....what do they hold onto now?  

 

[kscarbel2]

22 minutes ago, Lmackattack said:

Mack had 13% in 1990 ....what do they hold onto now?  

 

 

[Lmackattack]

That is very interesting. I would have thought IH would have had a higher market share. It also seems the Mack brand is not as far off as they were 25 years ago, even though they are mostly a Volvo these days.

thank you

[kscarbel2]

3 minutes ago, Lmackattack said:

That is very interesting. I would have thought IH would have had a higher market share. It also seems the Mack brand is not as far off as they were 25 years ago, even though they are mostly a Volvo these days.

thank you

The Mack purchase, alike White/Autocar and GMC, was all about buying market share. And with Mack, it was about "hedging their bets" for a period of time. But all along, the spotlight in their world is principally shown on Volvo. Mack has no meaningful overseas presence anymore aside from the long time Australia/New Zealand and Venezuelan plant markets (some "rogue" US dealers export a few trucks globally), and Renault has to fight the pro-Volvo theme to retain the global presence it has (Volvo assumes that Renault and the Mack Distributor Council couldn't possibly have anyone who knows something about trucks and the markets they've long covered).

[theakerstwo]

I am surprised that Western Star is as low as it is because I see so many now pulling dumps and with dump bodies on them.

[kscarbel2]

1 minute ago, theakerstwo said:

I am surprised that Western Star is as low as it is because I see so many now pulling dumps and with dump bodies on them.

As any distributor principal can tell you, Kenworth has been leading the vocational segment in a massive way, from coast-to-coast, over the last two years.

Western Star would have better numbers if it went after the fleet business. However Daimler wants to reserve that for Freightliner.

[Jamaican Bulldog]

I have always wondered what the marketing strategy is for Paccar by having two trucks (Peterbilts and Kenworth) that are so similar

[HeavyGunner]

Stupid question, aren't dump trucks and logging trucks considered off road or vocational trucks? If so, then Navistar covers more than just over the road trucks because I see quite a few IH dump trucks and log trucks.