Cerberus to Acquire Majority Interest in Navistar Defense

[kscarbel2]

NEW YORK, Dec. 3, 2018 /PRNewswire/ -- Cerberus Capital Management today announced a definitive agreement with Navistar International Corporation under which certain affiliates of Cerberus will acquire a 70% interest in Navistar's defense business, Navistar Defense, LLC.

Headquartered in Lisle, Illinois, Navistar Defense is a leading tactical wheeled vehicle original equipment manufacturer serving military, law enforcement, and government agencies worldwide. Navistar Defense provides a complete portfolio of both tactical and commercial off-the-shelf military vehicles, as well as custom-tailored lifecycle support solutions to a global customer base. Since 2004, Navistar Defense has delivered approximately 37,000 vehicles across 28 countries and has access to Navistar's global dealer network across 90 countries.

"We are excited to partner with Navistar to build upon Navistar Defense's leadership position in the defense vehicle industry and support its large installed base," said Michael Sanford, Co-Head of Private Equity and Senior Managing Director of Cerberus. "We look forward to leveraging our financial and operational expertise to execute on strategic initiatives focused on expanding the reach of its industry-leading portfolio and support services."

"Today's announcement is a strategic milestone for Navistar Defense as it provides the business with a well-established, long-term partner that is focused on making crucial growth investments in the business," said Persio Lisboa, Chief Operating Officer, Navistar. "Navistar Defense strategically complements Cerberus' existing portfolio and we look forward to collaborating with, and supporting, the business as it enters its next phase of synergistic growth."

The transaction is subject to customary closing conditions and is expected to close in 2018.

Kirkland & Ellis LLP acted as legal counsel to Cerberus and Navistar. Renaissance Strategic Advisors acted as strategic advisor to Navistar on the transaction.

About Cerberus

Founded in 1992, Cerberus is a global leader in alternative investing with over $35 billion in assets across complementary credit, private equity, and real estate strategies. We invest across the capital structure where our integrated investment platforms and proprietary operating capabilities create an edge to improve performance and drive long-term value. Our tenured teams have experience working collaboratively across asset classes, sectors, and geographies to seek strong risk-adjusted returns for our investors.

[RoadwayR]

Why?  Unless:  I seem to remember there are certain DOD regulations regarding foreign ownership of defense contractors........  

[Maxidyne]

Just like Volvo puts the Mack brand on their Renault military trucks for the North American market...

[james j neiweem]

This is absolute BS Trump where is your bully pulpit?

[kscarbel2]

Am I missing something? Steve Feinberg-managed Cerberus Capital Management is an American private equity firm based in New York.

Now I don't know what Feinberg and Troy Clarke worked out, but one possibility is...........there is a shared desire to take on Oshkosh. However, NAV doesn't have the finances to do it, and a VW buyout is NOT on the horizon. Enter Cerberus, who sees a profit opportunity.

And by having Cerberus fund 70 percent of the extremely cyclical defense business, Troy Clarke will have more funds to invest in commercial truck product development. The in-depth update of all the models, and the new Silverado-based CV, is a brilliant success. But by 2022, NAV will need all-new replacements in order to be competitive.

[RoadwayR]

Makes sense.  I was figuring maybe NAV was unloading their defense business in order to facilitate a merge with Traton.  I remember when Renault's ownership of AMC reached a certain percentage they had to divest AMGeneral.

[kscarbel2]

Stephen Feinberg, the Private Military Contractor Who Has Trump’s Ear

Stephen Witt, The New Yorker  /  July 13, 2017

In the last week of the 2016 Presidential campaign, Stephen Feinberg, the billionaire Manhattan financier, made the largest political donation of his life. On November 3rd, just five days before the election, he gave nearly a million dollars to Rebuild America Now, the Trump-supporting super PAC known for its blistering attacks on Hillary Clinton. That Sunday, the PAC spent eight hundred thousand dollars on an eleventh-hour blitz of negative TV spots, including one that aired repeatedly during N.F.L. broadcasts, condemning Clinton’s support for changing the name of the Washington Redskins. “Yeah, you thought you were safe, sitting in your recliner in your man cave, cold beer and a bowl of chips,” the ad said. “Wrong. Hillary Clinton wants to mess up your football, too.” Two days later, Trump won the Presidency.

Feinberg is lean, with a runner’s physique and a mild New York accent. His manner is equanimous, and his focus on the task at hand is intense. All who have worked with him speak of his penetrating analytic intelligence, his surpassing desire for privacy, and his steady hand as an investor. To the financial press, he is known as the C.E.O. of Cerberus Capital Management, one of the country’s largest investment firms, with business lines in private equity, distressed debt, hedge funds, and real estate. His holdings have included the once struggling General Motors automotive-financing division, the controversial defense contractor DynCorp, and the Bushmaster assault-rifle brand. For Feinberg, the Trump campaign was a classic investment target: compromised, flailing, politically toxic—but ultimately successful.

This February, it was reported that Feinberg was being considered for a post in the Trump Administration, overseeing a shakeup of the United States intelligence community. Career spies were alarmed at the suggestion; Feinberg has no intelligence experience, and his history at Cerberus suggested the likelihood of a radical restructuring, starting with management. This skepticism of his suitability for the role was shared by a former Cerberus insider with whom I spoke. “He’s a phenomenal manager of an investment fund, but his brilliance is in his trading,” he said. “I don’t think he’d succeed in the bureaucratic environment of Washington.” (Through a spokesperson, Feinberg declined to comment.)

The Trump Administration did not go forward with the appointment, but the rumors have persisted. And, this week, the Times reported that Steve Bannon and Jared Kushner had reached out to Feinberg—as well as to Erik Prince, the founder of Blackwater—for private-sector alternatives to the Department of Defense’s plan to send more troops to Afghanistan.

Through DynCorp, Feinberg already controls one of the largest military contractors in the U.S., one which trains Afghanistan’s police force and assists in their narcotics-trafficking countermeasures. According to the Times, Feinberg proposed an expanded role for such contractors, and also recommended transferring the command of paramilitary operations in the country to the C.I.A., increasing their operating footprint while decreasing both transparency and accountability. He reportedly discussed Afghanistan with President Trump in person.

The proposals raise obvious questions about war profiteering and conflicts of interest. DynCorp has been a bad investment for Feinberg. Buying at the tail end of the military-contracting boom of the two-thousands, Cerberus overpaid for the company, then watched as much of its business evaporated following government-spending cuts and the drawdown of U.S. troops in in Iraq and Afghanistan. In the seven years since Cerberus acquired the company, Feinberg has replaced DynCorp’s C.E.O. four times.

Afghanistan, in particular, has been a problem. In recent years, the country has proved no more hospitable to for-profit military contractors than it has to stumbling empires. DynCorp’s profit margins are thin there; revenues are falling, according to the former Cerberus insider. Several high-level managers from Cerberus portfolio companies have defected to Pacific Architects & Engineers, an upstart competitor that is taking DynCorp’s business. And DynCorp workers are often in peril. Since Cerberus acquired the company, twenty-nine DynCorp employees have been killed on the job. Most of them died in Afghanistan, including a retired U.S. Army colonel whose convoy was hit by a bomb.

A suggestion from Feinberg to expand the role of military contractors would be naked in its self-interest, but his other recommendation—transferring paramilitary operations in Afghanistan to the C.I.A.—deserves equal scrutiny. Here, Feinberg is operating from the heart. Although his personal military experience is limited to a brief stint in the Princeton R.O.T.C., he has, through his investments, developed an unusually close relationship with the U.S. Special Forces community. Of particular interest is Tier 1 Group, a Cerberus-owned private military base outside Memphis, which has, since 2008, served as a training ground for Navy SEALs and Marine Special Operations. Tier 1 Group’s facilities include a long-distance-shooting range, an ersatz Afghan village for staging commando raids, and an outdoor road course for tactical-driving training. Through his control of the facility, Feinberg has even been provided with after-action reports from Special Operations missions, according to Steve Reichert, the founder of Tier 1, who spoke to me for a story I wrote for New York magazine. (Feinberg has also received training from military instructors, and is said to be a crack shot.)

Whatever their merit, Feinberg’s recommendations to the Trump camp were pushed aside, according to the Times, by Defense Secretary James Mattis, a career military man. But given Trump’s openness to outside counsel—and, in particular, his interest in the ideas of other billionaires—it’s possible that Feinberg’s ideas could resurface. Conflicts of interest notwithstanding, Trump could do worse in selecting an adviser. Indeed, he has done worse: Feinberg’s formidable intellect and concrete managerial experience are more valuable assets than Jared Kushner’s prep-school-and-real-estate background or Steve Bannon’s theories of pseudo-history. For now, Feinberg remains a peripheral figure in the Trump Administration, but sooner or later, one suspects, he’ll see a return on his investment.

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Trump Chooses Cerberus’s Stephen Feinberg to Lead Spy Advisory Panel

Jennifer Epstein, Bloomberg  /  May 11, 2018

President Donald Trump has chosen billionaire investor Stephen Feinberg to lead his intelligence advisory board, the White House said Friday.

Trump intends to appoint Feinberg, the co-founder and co-chief executive officer of Cerberus Capital Management in New York, to chair the President’s Intelligence Advisory Board, which plays a role in overseeing the intelligence community, deriving its influence from direct access to the president and his senior staff.

Among Cerberus’ holdings is the military contractor DynCorp International, which receives the vast majority of its $3 billion in annual revenues from the federal government.

The New York Times reported last July that Steve Bannon, then the White House chief strategist, and Jared Kushner, the president’s son-in-law and adviser, had asked Feinberg, as well as Blackwater founder Erik Prince, for proposals to send private-sector workers to Afghanistan in place of American troops.

In March 2017, Feinberg joined Trump and Defense Secretary Jim Mattis on a trip to see the new aircraft carrier Gerald R. Ford in Newport News, Virginia, after it was reported that Feinberg had held discussions with the administration about a review of U.S. intelligence agencies.

Some critics at the time assailed Feinberg as ill-equipped for the role. At a Senate hearing that month, Republican Senator Susan Collins of Maine expressed concern that "an individual who runs a private equity firm" and doesn’t have experience in the relevant areas was being considered for the job.

The White House suggested in a statement Friday that Feinberg was well-suited for the position because of his "over 30 years of experience conducting organizational assessments, operational improvements, and complex reforms across foreign and domestic stakeholders to his position."

[james j neiweem]

MY bad on the foreign takeover , at least so far.

[grayhair]

On ‎12‎/‎3‎/‎2018 at 3:43 PM, kscarbel2 said:

Am I missing something? Steve Feinberg-managed Cerberus Capital Management is an American private equity firm based in New York.

Now I don't know what Feinberg and Troy Clarke worked out, but one possibility is...........there is a shared desire to take on Oshkosh. However, NAV doesn't have the finances to do it, and a VW buyout is NOT on the horizon. Enter Cerberus, who sees a profit opportunity.

And by having Cerberus fund 70 percent of the extremely cyclical defense business, Troy Clarke will have more funds to invest in commercial truck product development. The in-depth update of all the models, and the new Silverado-based CV, is a brilliant success. But by 2022, NAV will need all-new replacements in order to be competitive.

Smart money at work...