Wed 03/31/2021 12:30 PM
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Relevant Document:
Amended Notification Form

Takeaways

  • Brazil’s Administrative Council for Economic Defense, or CADE, has begun surveying market participants in its review of Navistar and Traton SE’s pending transaction. The agency sent questionnaires to more than 35 companies yesterday, March 30, and requested respective responses by April 14.

  • CADE launched its investigation last week after Navistar and Traton provided supplemental information in an amended notification form. Although the companies initially filed paperwork in December 2020, CADE requested Navistar and Traton to file an amendment to provide necessary additional data in mid-January.

  • Under ordinary procedure, CADE’s statutory review period is 240 calendar days, which may be extended up to 90 days.


Brazil’s Administrative Council for Economic Defense, or CADE, has begun surveying market participants in its review of Navistar International Corp. and Traton SE’s pending transaction. CADE’s General Superintendence sent questionnaires to more than 35 companies yesterday, March 30, and requested respective responses by April 14.

Mercedes-Benz do Brasil, Volvo do Brasil, Ford Motor Co. Brasil, Iveco Latin America, Cummins Brasil, Caterpillar Brasil, MTU do Brasil Ltda., Yanmar South America, FPT Industrial, Maxi Trust - Grupos Geradores and Stemac Grupos Geradores are among the participants targeted in the market inquiry. For access to the linked documents throughout this story as well as our M&A team's analysis and reporting on hundreds of other mergers and acquisitions request a trial here.

Based on the questionnaires, CADE is focused on gathering information to assess potential horizontal or vertical anticompetitive effects that the combination would have in the markets for light trucks, semi-heavy trucks, heavy trucks, road buses, city buses, minibuses, diesel engines for heavy vehicles, diesel engines for agricultural applications, diesel engines for industrial applications, diesel engines for marine applications and power generation sets, or gensets.

Both Navistar and Traton own subsidiaries with operations in Brazil. Traton’s subsidiaries MAN Latin America and Scania Latin America operate in the markets for the manufacture and sale of trucks, buses and diesel engines for industrial, marine and agricultural applications and sell parts in the original equipment supplier market. Additionally, Traton’s parent company, Volkswagen AG, owns subsidiaries that operate in Brazil, such as MAN Truck & Buses, MAN Energy Solutions SE and MAN Power Engineering.

Navistar operates in Brazil through its subsidiary International Industria Automotiva da America do Sul Ltda., or IIAA, and through Powertrain Indústria e Comércio Ltda., its joint venture with Cummins. IIAA operates in the markets for the manufacture and sale of diesel engines in vehicle, agricultural, industrial and marine applications, the manufacture and sale of diesel engine parts, the manufacture and sale of diesel, gas and biogas gensets and the sale of truck parts.

Powertrain assembles power trains and other parts exclusively for Traton subsidiary MAN Latin America engines, according to the amended notification form.

CADE formally launched its investigation last week after Navistar and Traton provided supplemental information in an amended notification form. Although the companies initially filed paperwork in December 2020, the General Superintendence requested Navistar and Traton to file an amendment to provide necessary additional data in mid-January. Under ordinary procedure, CADE’s statutory review period is 240 calendar days, which may be extended up to 90 days.

According to the amended notification form, Navistar and Traton have secured regulatory clearances in Albania, Canada, Colombia, Denmark, Germany, Macedonia, Montenegro, Saudi Arabia, Serbia, Trinidad and Tobago, Tunisia, Uruguay and the United States.

Navistar said that the transaction is expected to close in mid-2021, subject to the receipt of regulatory approvals and the satisfaction or waiver of closing conditions. Traton is not required to effect the closing prior to July 1.

Reorg’s coverage of this transaction can be found HERE.
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