Navistar International Corp., the truckmaker trying to end losses, rose the most in more than a month after it averted a proxy fight with investor Carl Icahn by agreeing to accept three new directors.
Navistar rose 7.5 percent to $22.81 at the close in New York, the biggest gain since Sept. 6. Shares in the Lisle, Illinois-based company have dropped 40 percent this year.
The truckmaker added Vincent Intrieri, an Icahn representative, and investor Mark Rachesky as directors. They replace Eugenio Clariond and Steve Klinger, the company said in a statement. Navistar said it agreed to add a third director to be designated and agreed upon by Icahn and Rachesky and their affiliates. The new directors will stand for election next year.
Last month in a letter to Navistar’s board, Icahn said he wanted four board seats made available to shareholders “immediately” and that he would proceed with “protracted litigation and a proxy fight” if necessary to protect his investment. Icahn has pressured Navistar’s new management, led by former Textron Inc. Chief Executive Officer Lewis Campbell, after the company had a net loss of $241 million for the first three quarters of its fiscal year.
“I am glad to have reached an agreement that provides strong shareholder representation on the board and look forward to working diligently with the board to enhance value at Navistar,” Icahn said in the statement.
The truckmaker ousted Dan Ustian as CEO in August after an inquiry from regulators about its accounting and disclosures, and the company reversed course on an engine strategy that had failed to meet 2010 federal emission standards. Icahn, who holds 14.9 percent of Navistar, said large shareholders weren’t consulted about management changes, including Ustian’s departure.
“They’re on the inside now instead of on the outside,” David Leiker, an analyst with Robert W. Baird & Co., said in an interview. “This is following a fairly predictable path, but it’s hard to say what the outcome ultimately will be.”
Navistar’s four largest investors hold about 50 percent of the shares, including a stake of almost 15 percent held by Rachesky, according to data compiled by Bloomberg.
Icahn publicly disclosed a stake in Navistar last year, followed by Rachesky in June. The investors have pushed Navistar to boost its valuation. The company in June adopted a poison pill to fend off hostile bids.
Analysts have speculated that Navistar could attract suitors such as Fiat Industrial SpA and Volkswagen AG as they seek expansion in North America. An acquisition would be complicated by Navistar’s defense business, which supplies the U.S. military, and its $3.2 billion in pension and retiree health-care obligations.
“I continue to believe Navistar’s unfunded pension and health-care obligations will be an impediment to any M&A transaction,” said Leiker, who is based in Milwaukee and rates the shares neutral. “And that situation doesn’t go away.”