DaimlerChrysler AG and Western Star Trucks Holdings announced on July 19 that their respective boards approved a definitive agreement for DaimlerChrysler's subsidiary Freightliner LLC, a heavy-truck manufacturer, to acquire 100 percent of the outstanding stock of Western Star Trucks Holdings, a Canadian-based manufacturer of trucks and buses. In an agreement reached with Western Star, Freightliner will offer to purchase the outstanding shares at C$42 per share, for an approximate purchase price of C$670 million.
DaimlerChrysler said the move strengthens DaimlerChrysler's position in the commercial vehicle industry by broadening the company's truck product lines and dealer organization. “The combination of Freightliner, Sterling and Western Star creates a powerhouse commercial vehicle company in North America and a tremendous platform for growth,” said Dieter Zetsche, head of DaimlerChrysler Commercial Vehicles Division. He said the proposed acquisition “continues DaimlerChrysler's strategy for growing its worldwide leadership in the heavy-duty truck industry, complements our Freightliner and Sterling lines of trucks, and makes DaimlerChrysler's line of bus product offerings, including Thomas Built Buses and Setra, the broadest and most complete in North America.”
The Western Star brand name and truck line will continue in the market, while Western Star's support operations will be integrated with Freightliner's vocational truck division, Sterling Trucks. The two product lines fulfill Freightliner's strategy to offer a full truck line to owner-operators as well as expand the company's vocational truck offerings.
Through the purchase, Freightliner gains Orion Bus Industries, a heavy-duty transit bus manufacturer. With the addition of Orion to Freightliner's current bus products, DaimlerChrysler becomes North America's sole complete bus product line manufacturer. Orion's bus line will join Freightliner's family of bus products, including Thomas' school bus products, the new Thomas SLF 200 --the result of a joint venture between Freightliner and U.K.-based Mayflower Corporation, a new cutaway shuttle bus line acquired from Metrotrans, and the Setra coach, a DaimlerChrysler product line. Orion will operate as part of Freightliner's Specialized Vehicles unit.
As part of the proposed acquisition, Freightliner gains a new 460,000-square-foot truck manufacturing plant that opened in March in North Charleston, SC., with the capacity to produce up to 20,000 units per year. The proposed acquisition also includes Western Star's headquarters and truck plant in Kelowna, BC, and bus manufacturing sites in Mississauga, Ontario and Oriskany, NY. Western Star sold nearly 7,200 trucks and 800 buses in 1999, with revenues of C$1.3 billion. In addition to Freightliner acquiring Western Star Trucks Holdings, Western Star Australia Pty Ltd, a wholly-owned subsidiary of Western Star Trucks, will be sold to a corporation associated with Western Star's current chairman Terry Peabody, for approximately C$39 million. Also included in the purchase will be the distribution rights in Australia, New Zealand and the Asia-Pacific region. MAN-Australia, acquired by Western Star Australia in March, will operate under the direction of the new Australian corporation. Under the terms of the agreement, Western Star Trucks Holdings will convene a meeting of their Shareholders on a date to be announced to vote upon the proposed Plan of Arrangement. The proposed acquisition remains subject to approval by the governmental authorities of Canada, the U.S., and Australia. The transaction should be completed in the fall of 2000.