Meantime in the wake of Andreas Renschler’s departure from Volkswagen’s Traton, the truck and bus division has increased its offer for Navistar International shares to US$43 per share in cash.

Traton said last week that  the price represents a 23 per cent  increase from the $US35 per share the company offered at the end of January.

Navistar stock jumped more than 20 per cent on news of the latest offer, topping $US43 in early trade. following the announcement

Confirming the bid, Navistar said its board of directors and management team are committed to exploring all avenues to maximise value.

“Consistent with its fiduciary duties, the board will carefully review the revised proposal from Traton in consultation with its advisors to determine the course of action that it believes is in the best interests of the company and its stakeholders.”

It added that Navistar shareholders do not need to take any action at this time, and there is no assurance that any transaction with Traton will occur.

Traton already holds 16.8 per cent of Navistar.

The sticking point has apparently been a ‘hold out’ by one of Navistar’s major shareholders, Mark Rachesky, who is a billionaire US investor , believed to be Navistar’s second largest shareholder, with 16 per cent of the company in his MHR Fund Management. Rachesky, controls a seat on the board of Navistar and told the board he believed the Traton original bid of $US35 a share was too low and that he believed it was worth more like $US43 a share.

At one point in the early part of the Covid Crisis, when markets plunged, Navistar’s shares plunged to around $US 15 but have since bounced back to $US 37.

Most analysts and observers believe Rachesky’s ambit claim was way over the odds and is the primary reason the Traton deal has stalled. Rachesky’s former mentor and third largest investor in Navistar, 83 year old Carl Icahn is also believed to have wanted a higher bid from Traton, but not the massive over value that his former protege was demanding.

Given Navistar’s indebtedness, with a highly leveraged balance sheet and a weak truck market most believe that the current bid by Traton is a reasonable one and that the US truck maker will not have a better chance to cement its future as part of a global truck making operation.

“Navistar was not worth what Rachesky was asking for,”one source close to Navistar said.

“Maybe if Mark had said $US55 to the other directors…a deal could have been had before the pandemic.” Another source put it more bluntly:”The rest of the board is not in love with Mark Rachesky.”

“We continue to believe in the compelling strategic benefits that a complete merger of Traton and Navistar would produce,” said Traton’s recently appointed CEO, Matthias Grundler.

“This is why we are re-emphasising our interest in the transaction in spite of the Covid-19 pandemic.”

Traton expects that the independent members of Navistar’s board of directors will now review the increased offer, the company said.

“The offer remains subject to a satisfactory due-diligence process as well as negotiation and a common understanding as regards the merger agreement,” it added.

Navistar’s financial advisors are major investment companies JP Morgan and PJT Partners the company said.

The revised offer emphasises that despite the architect of the takeover, Renschler leaving Traton in July  the VW controlled truck company under new boss Grundler is focussed on making the deal happen to give  the operation a footprint in the important US market.

It is also clear that without Traton, Navistar will struggle for the resources necessary to take it into the next generation of  zero emission power trains which are already consuming enormous financial resources at much stronger truck corporations including Paccar, Volvo and Daimler.

Navistar faces growing scepticism from analysts about its chances for a lucrative buyout.

“Based on Traton’s his-tory with buyout situations, we doubt it will raise its bid further or that any competing proposal will emerge, especially given Navistar’s levered balance sheet and currently anaemic demand for commercial vehicles,” BMO Capital Markets said