Volkswagen's commercial truck unit, Traton, has agreed to buy the rest of truck manufacturer Navistar International for $3.7 billion in cash.
Traton, which owns 16.8% of Navistar, offered $44.50 per share to buy the rest of the company, looking to increase the German automaker's commercial truck market presence in the U.S.
"We are pleased to have reached agreement in principle for a transaction after intensive negotiations with Navistar," Matthias Grundler, CEO of Traton, said in a news release Friday.
Navistar said in a separate news release Friday that its board was "prepared to move forward" with the transaction, and that the deal has the support of its two largest shareholders, Carl Icahn and hedge fund MHR Fund Management.
The agreement follows months of negotiations after Traton made an unsolicited cash bid in January to buy out the other shareholders in Navistar for $2.9 billion, or $35 per share.
Navistar, formerly known as International Harvester, is based in Lisle, Ill., and has deep roots in Chicago. In the 1850s, agricultural machinery pioneer Cyrus McCormick opened his first factory in Chicago and built a dealer network to sell his mechanical reaper, which revolutionized farming. In 1902, International Harvester was formed from the merger of McCormick Harvesting Machine and Deering Harvester, with the combined company branching out into automobile, tractor and truck manufacturing.
International Harvester ran into financial troubles in the 1980s, discontinuing its Scout lines of consumer trucks and selling its agricultural business to focus on building commercial trucks. The retooled company took the name Navistar in 1986 and has remained a leader in commercial truck manufacturing.
More recently, Navistar has grappled with the fallout from allegedly defective engine emissions systems in certain 2011 to 2014 model year International commercial trucks.
In January, a Chicago federal judge gave final approval to Navistar's agreement to pay truck owners and lessees $135 million to settle a class-action lawsuit covering more than 66,500 affected trucks.
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