VW aims to raise $2B from truck unit IPO

FRANKFURT -- Volkswagen Group aims to raise up to 1.9 billion euros ($2.1 billion) by floating a stake of at least 10 percent in its Traton trucks unit later this month, its second attempt to bring the business to market.

VW intends to offer stock in Traton, which sells MAN and Scania vehicles, for 27 euros to 33 euros each, it said in a statement Thursday. The sale values the division at 13.5 billion euros to 16.5 billion euros ($18.6 billion).

VW plans to invest proceeds in transforming its auto production as it readies the launch of dozens of electric vehicles over the coming years and deepens an alliance with Ford Motor.

It is also seeking to capitalize on the premium that truck stocks command over automakers to create an acquisition currency, having earlier shown interest in potentially boosting its 16.8 percent stake in U.S.-based truck maker Navistar. Management denies that a Navistar deal is in immediate prospect, but such a move would fit with a broader pivot by VW  toward the United States to balance its reliance on China, where it sells half its cars.

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

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.

"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."

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 green-shoe option for rights to additional stock, VW said.

Trading is set to start on June 28 and the company is targeting a free float of 10 percent to 11.5 percent of Traton’s shares, scaling back earlier ambitions to list up to a quarter of the unit.

The offer period for the share sale is set to begin on June 17 and end on June 27.

VW CEO 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, Germany, and stressed the urgency of his push to make the transportation giant less centralized and more agile to navigate an unprecedented industry transformation.

Reuters and Bloomberg contributed to this report