Volkswagen values truck unit at up to US$18.6 bln in IPO

The first day of trading is planned on June 28 for Volkswagen’s IPO of its heavy-trucks division. (AFP pic)

FRANKFURT: Volkswagen AG intends to sell stock in its heavy-trucks unit at a price between €27 (US$30.45) and €33 per share in what could be one of the year’s largest European public offerings.

The range, which the automaker set Thursday, follows its announcement earlier this month of the public listing for the wholly owned Traton SE subsidiary in Frankfurt and Stockholm.

The base offer will be 50 million shares with a possible over-allotment of as many as 7.5 million shares, subject to the use of a so-called greenshoe option for rights to additional stock, VW said in a statement. The first day of trading is planned on June 28, and the company targets a free float of between 10% and 11.5% of Traton’s shares.

“We are now all set for the decisive phase,” VW Chief Financial Officer Frank Witter said in the statement. “The IPO is driven by the aim to create value for our stakeholders.”

Traton, which sells MAN and Scania AB vehicles, is valued between €13.5 billion and €16.5 billion (US$18.6 billion) under the offer terms. VW targets proceeds of as much as €1.9 billion. The offer period is set to begin on June 17 and end on June 27.

VW surprised investors last month when it revived its effort to float Traton just weeks after shelving the plan in March.

The sale will mark a litmus test not only for IPO demand in a European stock market that turned in its worst month in 3 1/2 years during May but also for the ability of VW’s management to push through deeper structural change.

Chief Executive Officer Herbert Diess, who took over the job a little more than a year ago, earlier Thursday addressed 500 top executives near VW’s corporate headquarters in Wolfsburg and stressed the urgency of his push to make the transportation giant less centralised and more agile to navigate an unprecedented industry transformation.

A successful IPO would generate funds for Traton’s expansion outside of its main European market.

The unit has drafted a global push to challenge industry leaders Daimler AG and Volvo AB in markets such as North America and China, including potentially boosting its 16.8% stake in US peer Navistar International Corp.

Besides Swedish heavy-truck specialist Scania and Germany’s MAN, the unit includes a smaller operation in Brazil that sells VW-branded commercial vehicles for emerging markets.