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Caterpillar and Navistar JV to join Navistar

September 29, 2011

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PEORIA, Ill.—Caterpillar Inc. and Navistar International Corp. said Thursday that their commercial truck joint venture will become a Navistar subsidiary.

Financial terms were not disclosed.

In 2008, the companies said they would form an alliance for a truck business, which led to the creation of a 50/50 joint venture called NC(2) Global LLC.

Peoria, Ill.-based Caterpillar makes heavy equipment and engines for commercial vehicles and power generators, while Warrenville, Ill.-based Navistar makes diesel engines, along with commercial trucks and a variety of other vehicles.

The joint venture is focused on the development of trucks for markets outside of North America. The companies said they also have a deal to produce Caterpillar heavy-duty trucks for North America.

On Thursday, Caterpillar and Navistar said that NC(2) will become a subsidiary of Navistar. And through a new licensing agreement, both Navistar's International and Caterpillar branded trucks will still be distributed through both International and Caterpillar dealers outside of the United States.

The companies said they also reached a new deal to develop a new, cab-over-engine Caterpillar truck to be sold around the world. The terms of the new business will be finalized in the coming months.

In addition to the truck business, Caterpillar provides remanufacturing services to Navistar and supplies key parts for some Navistar engines. In turn, Navistar supplies engines to Caterpillar for certain power generation and marine applications.

In morning trading, Caterpillar shares rose 32 cents to $75.40, while Navistar shares rose 31 cents to $33.72.