Volkswagen to float 10per cent of truck unit, seeks to raise 1.9 billion euros

Volkswagen to float 10per cent of truck unit, seeks to raise 1.9 billion euros

Volkswagen aims to raise up to 1.9 billion euros (US$2.1 billion) by listing truck unit Traton, it said on Friday, scaling back earlier ambitions to list up to a quarter of the unit by opting to float a 10per cent stake.

FILE PHOTO: Visitors stand at booth of VW's truck unit Traton Group in Hanover
FILE PHOTO: Visitors stand at the booth of Volkswagen's truck unit Traton Group, former Volkswagen Truck & Bus AG, in Hanover, Germany September 19, 2018. REUTERS/Fabian Bimmer/File Photo

FRANKFURT: Volkswagen aims to raise up to 1.9 billion euros (US$2.1 billion) by listing truck unit Traton, it said on Friday, scaling back earlier ambitions to list up to a quarter of the unit by opting to float a 10per cent stake.

The German carmaker said in a statement that the offering would be priced at 27-33 euros per share, which Jefferies analysts said valued Traton at a slight discount to industry peers but at a premium to Swedish competitor Volvo.

Wolfsburg-based VW plans to invest proceeds in transforming its auto production as it readies the launch of dozens of electric vehicles over the coming years and deepens an alliance with Ford Motor Co.

It is also seeking to capitalize on the premium that truck stocks command over automakers to create an acquisition currency, having earlier shown interest in U.S.-based truck maker Navistar.

Management denies that a Navistar deal is in immediate prospect, but such a move would fit with a broader pivot by the leading European carmaker towards the United States to balance its reliance on China, where it sells half its cars.

The stake size is at the bottom end of a range of 10per cent-20per cent that sources had earlier indicated. If banks running the deal exercise an over-allotment option, the issue size could reach 11.5per cent of Traton's equity.

At the offer range, the initial public offering values Traton at 13.5-16.5 billion euros.

Shares in VW eased by 0.5per cent in early trading in Frankfurt on Friday as analysts cautioned that Traton's potential acquisitiveness could lead to the issue of fresh equity that would dilute existing shareholdings.

Jefferies, in a note, said that Traton's enterprise value as a multiple of core earnings - a measure of a company's ability to support its equity and debt costs - of 8.2 times was slightly lower than the sector average but higher than Volvo's, which it sees as offering better value.

The carmaker is being more cautious about the volume of shares it will place after halting earlier listing plans in March, when it had planned to place a stake of up to 25per cent on the stock market, citing market conditions.

More shares could be sold subsequently if the IPO is successful, a person familiar with the matter said this month, adding VW would remain Traton's majority shareholder for the foreseeable future.

The offering will begin on Monday, with management holding a series of investor roadshows. It ends on June 27, with the first day of trading in Frankfurt and Stockholm set for June 28.

(Reporting by Douglas Busvine; Editing by Susan Fenton and Jan Harvey)

Source: Reuters

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