Navistar International Corp (NYSE: NAV) is poised to report its fourth-quarter and full-year earnings at a time when it is an acquisition target for Volkswagen truck unit Traton. Expectations are high that the company will deliver a year-over-year-decline in earnings on lower revenues.
Earnings expectations
Analysts expect the company to report earnings of $0.23 a share, representing year-over-year decline of about 70%. Revenues are also believed to have taken a hit and could come in at $2.09 billion, representing a 24% year over year decline. Amid the disappointing earnings expectations, Navistar stock is still up by more than 30% for the year.
While earnings expectation remains muted, the stock has continued to power high, with the stock at two-year highs. The rally comes amid growing expectation that Navistar shareholders will agree to a much improved $44.50 a share takeover deal by the German automaker.
The deal, which is an improvement from the initial $43 a share deal, values the American truck company at about $3.7 billion. Currently, Navistar holds a 16.7% stake in the U.S truck company.
Truck Industry Consolidation
The acquisition was initially on the rocks after Volkswagen sent the U.S automaker a letter warning that it essentially put up or quit complaining about the $43 a share bid initially tabled. Big Navistar shareholders led by Carl Icahn and MHR Fund had also hinted that they would block the takeover if the bid was not increased to between $50 and $70 a share.
Fats forward, the two shareholders have hinted they would agree to the much lower $44.50 a buyout price. The change of stance sounds like bad news, given that other shareholders were holding out for a much higher price.
The proposed takeover is in line with trends in the truck industry, which has seen a wave of consolidation in recent years. If approved, the deal will bring Navistar together with other popular brands, including MAN Scania and Volkswagen trucks.