Is Paccar the ultimate fahrvergnügen?

Jason Cannon

July 3, 2014

Volkswagen Group refuted Thursday reports that it was interested in bidding for U.S. truck-maker Paccar in 2015. But that hasn’t stopped me from sitting here all day and wondering what a Volkswagen/Paccar jam up might look like.

On the surface, this deal doesn’t make a ton of sense. Last month, VW Group sold $2.7 billion in preferred stock to fund a takeover of Scania, which VW will fold with its own commercial-vehicle operations and MAN. That newly-minted truck division will go head-to-head with Daimler, at least in Europe. But a straight-up purchase of Paccar would bring with it DAF, giving VW yet another European truck operation. In all likelihood, DAF would be spun off and sold to someone else.

I think most of us expected a VW play for a U.S. truck maker to come in a bid for Navistar International. There are benefits to that. First, it would come at a steep discount compared to Paccar. Secondly, there’s no European component for VW to wrangle with, or to peel off and find another buyer.

In approving any potential sale, Paccar shareholders will be out for a premium. The company is super-profitable and shareholders will want to be compensated for their trouble. Again, this will come with a substantial markup over Navistar, which trades at roughly half the price of Paccar. A purchase of Paccar could cost VW upwards of 10-times more than it raised for Scania.

On the other hand, there are portions of this deal that make a ton of sense. Volkswagen has made no secret of its desire to become the largest automotive company in the world. A buyout of Paccar does that practically instantly. A product suite that includes Kenworth and Peterbilt puts Volkswagen in rarified air; up there with the likes of Daimler and Volvo.

Andreas Renschler was head of Daimler’s truck unit before he and Wolfgang Bernhard – Daimler’s current truck boss – swapped roles. Shortly after the job change, Renschler left Daimler and is now slated to oversee VW’s commercial vehicle operations next year – a commercial vehicle operation that doesn’t include a meaningful presence in North America.

Renschler is quite familiar with the North American truck market and Paccar’s place in it, and would inherit a massive dealership and service network should VW actually buy Paccar. Volkswagen would get marketshare with the stroke of a check, and don’t you think Renschler would like to go head-to-head with the guy who took his job?

So what do you think? Is a VW/Paccar deal on the horizon, or was this a case of someone speaking out of turn in front of a reporter? Is a VW deal for Navistar more likely?

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