The long-awaited and several times-delayed Volkswagen truck arm sell off is set to go ahead soon and could value the operation at up to $24 billion. The VW organisation separated its commercial truck division from its car making operations and renamed it under the Traton name, after it took over both Scania and MAN trucks and joined them in with the South American VW truck manufacturing operation.
Since then the former Daimler global truck boss, Andreas Renchler has been reorganising the Traton truck arm to enable it to develop into a global giant to match Daimler, Volvo and, to a certain extent, Paccar in selling trucks across the world in all continents.
One of the missing pieces in the jigsaw is likely to be Navistar, who own International Trucks, as the Traton organisation lacks any real presence in the North American truck market. Traton is already a minority shareholder of the Chicago-based truck maker, but an IPO selling off a small proportion of Traton shares should top up the war-chest to enable further capital investment in both acquisition and moving the current brands forward.
Press reports in Europe are talking about a free float of Traton shares in up to 11.5 per cent of the company. In analysing the likely implications of the mooted sale, experts suggest, if Traton matched Volvo’s valuation of 9.5 times annual earning, it would be worth $22 billion, but those experts also suggest the operation has increased productivity to gain from integrating some components for Scania and MAN and will be worth more.
“The whole team at Traton has worked hard and diligently to reach this point,” said Andreas Renschler, Traton CEO and member of the Board of Management of Volkswagen. “Now roadshow and book-building will begin. We will now meet investors across the globe to convey our Traton story and the future potential of the Group. We are confident that we will then be able to ring the Stock Exchange bell before the end of June if the market stays reasonable.”
Optimism in the world’s share markets for the the sale has seen VW’s share price rise in anticipation of the share sell-off, expected on June 28. Some commentators are suggesting the move by VW could stimulate Daimler to go down a similar route and hive off its truck division.