Navistar’s South American engine subsidiary to acquire another diesel engine company

Navistar International Corporation announced that its South American engine subsidiary, International Engines South America, has agreed to acquire MWM Motores Diesel Ltda (MWM), a major Brazilian diesel engine producer. Purchase price was not disclosed.

MWM produces a broad line of medium- and high-speed diesel engines ranging from 50 to 310 horsepower for use in pick-ups, vans, light and semi-heavy trucks, as well as agricultural, marine and electric generator applications.

OEM customers include a number of the most important corporations in the automotive, agricultural and industrial segments, including General Motors, Volkswagen and Nissan. Annual production exceeds 85,000 engines with 2004 revenues for the privately held company of approximately $370 million.

Although the agreement has been completed, CADE, the Brazilian anti-trust regulatory authority, will review the combination of the two companies. Only minimal synergies can be achieved prior to CADE approval.

Daniel C. Ustian, Navistar chairman, president and chief executive officer, said the acquisition supports the company’s strategy to grow its engine business at both ends of the range of diesel engines currently produced. Ustian noted that in addition to increased volume, the acquisition provides an important addition to engineering capability and will allow the company to better serve customers in the growing South American market.

“This acquisition will spread the costs of the company’s emissions solutions over a broader range of engines and is consistent with our corporate commitment to invest in businesses that provide growth and return to shareowners,” Ustian said. “We will be able to better serve customers with a wider range of products and leverage our industry-leading emissions technology globally. Additionally, the acquisition will allow International to tap the huge potential in both North America and South America for cost effective dieselization of Class 5 and smaller vehicles.”

Navistar entered the South American market in March 1999, when it acquired a 50 percent interest in a company that was renamed Maxion International Motores S.A. In January 2001, Navistar became the sole owner of Maxion International Motores and shortly thereafter, the company was renamed. International Engines South America.

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