Volkswagen Truck & Bus forms alliance with Navistar for strategic technology and supply cooperation and a procurement joint venture

(l.t.r.) Walter G. Borst (CFO Navistar), Troy Clarke (CEO Navistar), Andreas Renschler (CEO Volkwagen Truck & Bus) and Matthias Gründler (CFO Volkswagen Truck & Bus)

• Volkswagen Truck & Bus has agreed to subscribe to a capital increase of US-based commercial vehicles manufacturer Navistar International Corporation, resulting in a 16.6% stake of the outstanding shares
• The two companies will pursue a strategic technology and supply cooperation and establish a procurement joint venture

Brunswick, 08-Sep-2016 — /EuropaWire/ — Volkswagen Truck & Bus GmbH (“Volkswagen Truck & Bus”) and Navistar International Corporation (“Navistar”), the US-based commercial vehicles manufacturer, today announced that they have formed a far-reaching alliance that includes framework agreements for a strategic technology and supply cooperation and a procurement joint venture. Volkswagen Truck & Bus will furthermore acquire a 16.6% equity stake in Navistar through a primary share issuance.

With the completion of this transaction, Volkswagen Truck & Bus, which includes the brands MAN, Scania, and Volkswagen Caminhões e Ônibus, will gain access to the key North American market, where it was not previously represented. Andreas Renschler, CEO of Volkswagen Truck & Bus and member of the Board of Management of Volkswagen AG responsible for commercial vehicles, said: “Closer collaboration among our existing brands was a top priority for our commercial vehicles business and we are well on track in this context. We are now taking the next step on our way to becoming a Global Champion in the commercial vehicles industry. The strategic alliance with Navistar is an important milestone and will be very beneficial for both sides.”

“We are very pleased to partner with a global leader who shares our view of the world, in an alliance that will deliver multiple benefits and is consistent with our open-integration strategy,” said Troy Clarke, President and CEO of Navistar. “Starting in the near term, this alliance will benefit our purchasing operations through global scope and scale. Over the longer term, it is intended to expand the technology options we are able to offer our customers by leveraging the best of both companies and enabling Navistar to deliver enhanced uptime. Volkswagen Truck & Bus’s equity investment will strengthen our liquidity position and expand our financial flexibility, while aligning us with a valuable strategic partner.”

Volkswagen Truck & Bus will purchase from Navistar newly issued common shares representing, pro forma for such issuance, a 16.6% stake in Navistar for a price per share of $15.76 and an aggregate purchase price of approximately $256 million (or approximately €229 million at current exchange rates). In connection with this investment, Truck & Bus will be represented on Navistar’s Board of Directors. In addition, both companies have agreed to collaborate closely.

Matthias Gründler, CFO of Volkswagen Truck & Bus, said: “Our collaboration, especially with regard to the powertrain, will considerably increase our synergy potential. Navistar will be able to profit from excellent powertrain technologies and we, in turn, will benefit from significantly higher volumes. Initiating this strategic alliance now will enable us to implement the requirements of Navistar into our joint component platforms from the get-go.”

With the strategic technology and supply cooperation, Volkswagen Truck & Bus will become one of Navistar’s most important technology partners. While the partnership will focus on common powertrain systems, it will also enable collaboration in many aspects of future commercial vehicle development.

Additionally, Volkswagen Truck & Bus and Navistar have agreed to establish a procurement joint venture that will pursue joint global sourcing opportunities.

The strategic alliance will receive oversight from an Alliance Board consisting of top-level representatives from both sides.

Under the umbrella of Volkswagen Truck & Bus, Andreas Renschler has been heading the process of bundling medium- and heavy-duty trucks and buses of Volkswagen AG into a robust commercial vehicles group. The Company’s strategy includes plans to expand into new regions. Within the next decade, Volkswagen Truck & Bus aims to become a worldwide leading commercial vehicles group in terms of profitability, innovations for its customers and global presence.

The closing of the transaction and the implementation of the strategic alliance is subject to certain regulatory approvals and other customary closing conditions. The closing of the share acquisition by Volkswagen Truck & Bus is further subject to the finalization of the agreements governing the procurement joint venture and of the first contract under the technology and supply cooperation. Closing is expected to be completed in late 2016 or early 2017. Volkswagen Truck & Bus was advised by Rothschild as financial advisor, and Davis Polk & Wardwell LLP, CMS Germany and Bär & Karrer as legal advisors.

An official announcement conference call will be conducted on September 6, 2016 at 2.30 p.m. (CEST), which will be audiocast live at www.volkswagenag.com/ir/truckandbus.

Navistar International Corp.

Navistar International Corporation (NYSE: NAV) is a holding company whose subsidiaries and affiliates produce International^® brand trucks, proprietary diesel engines, and IC Bus^™ brand school and commercial buses. An affiliate also provides truck and diesel engine service parts. Another affiliate offers financing services. Additional information is available at www.Navistar.com.
Volkswagen Truck & Bus GmbH

Volkswagen Truck & Bus GmbH is a wholly-owned subsidiary of Volkswagen AG and is a global leader in commercial vehicles with its brands MAN, Scania, and Volkswagen Caminhões e Ônibus. In 2015, the brands of Volkswagen Truck & Bus sold a total of 179,000 vehicles. Its product range includes medium- and heavy-duty trucks and buses that are manufactured at 25 sites in 17 countries. As of December 31, 2015, the Company employed 76,000 people within all commercial vehicle brands worldwide. Volkswagen Truck & Bus is committed to creating a Global Champion in terms of profitability, customer innovations, and global presence. Already today, the Group has a leading market position in the European and South American truck markets.

This press release contains forward-looking statements and information on inter alia, the scope of the strategic alliance, ways of collaboration regarding the strategic alliance, descriptions of the business strategy of the company, and potential benefits of the strategic alliance. These statements and information may be spoken or written and can be recognized by terms such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “will” or words with similar meaning. These statements and information are based on assumptions relating to the company’s business operations and the development of the economies in the countries in which the company is active and which Volkswagen Truck & Bus has made on the basis of the information available to it and assumptions it believes to be reasonable. The forward-looking statements and information given involve a degree of risk, and the actual developments may differ from those forecast.

If any of these or other risks occur, or if the assumptions underlying any of these statements prove incorrect, the actual results may significantly differ from those expressed or implied by such forward looking statements and information.

Volkswagen Truck & Bus will not update this press release, particularly not the forward-looking statements. This press release is valid on the date of publication only.

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