Freightliner, Western Star first held acquisition talks in 1998
By Neil Versel
KELOWNA, B.C., Aug 23 (SNS) ó Freightliner LLC, a leading producer and seller of commercial trucks and buses in North America and a unit of major German-American auto-maker DaimlerChrysler AG (DCX), first discussed the possibility of acquiring assets of low-volume truck-maker Western Star Trucks Holdings Ltd. (WSH) in September 1998, 22 months before Western Star formally agreed to a $670.0 million (Canadian) takeover, Starkís News Service Interactive has learned.
In documents filed with Canadian securities regulators this
month, Western Star disclosed that the two firms had "preliminary
discussions" in September and October 1998 about the possibility of
Freightliner acquiring Western Star subsidiaries Orion Bus Ltd. and British
truck-maker ERF (Holdings) plc. The talks actually began prior to the November
1998 merger of Freightliner parent Daimler-Benz AG with
Western Star said that DaimlerChrysler representatives performed limited due diligence on ERF in March 1999. Western Star later sold ERF to German truck-maker MAN AG for $156.0 million (Canadian) in cash and $108.0 million (Canadian) worth of ERF liabilities.
In May 1999, the two companies began to "review the
possibilities" of merging Freightlinerís Sterling Truck Corp. unit with
Western Starís products, "whether through a merger or some form of joint
venture," according to the company documents. Freightliner first expressed
its desire to take over all of Western Starís North American truck operations
As Western Star was negotiating the sale of ERF,
Freightliner submitted a preliminary takeover proposal on
Four days after Western Star cut off talks with officials in New York, representatives of both firms met to "consider their respective approaches" toward negotiating a deal, according to the filing. Western Star and DaimlerChrysler agreed to sign a confidentiality agreement last February 17 and due diligence took place last April.
At a May 14 meeting in
As reported, DaimlerChrysler agreed last July 19 to acquire
Western Star for $42.00 (Canadian) per share, or a total of $670.0 million (Canadian).
The price corresponds to an estimated $28.45 per share, or $453.8 million, in
The two truck-makers further disclosed that a company
controlled by Mr. Peabody agreed to purchase Western Star Australia Pty. Ltd.,
the firmís Australian subsidiary, for $39.0 million (Canadian). Mr. Peabodyís
company will retain distribution rights for Western Star and MAN trucks in
Western Star purchased the Australian holdings of MAN as part of the ERF sale agreement last March.
As reported, Western Star shareholders will meet in