Navistar Reaches Engine Deal With Cummins

Navistar International (NYSE: NAV  ) has finalized a series of long-term supply agreements with engine maker Cummins (NYSE: CMI  ) , Navistar announced in a press release Monday. Under the terms of the deals, Cummins will provide its engines for a range of Navistar's heavy trucks. Navistar will also use a Cummins emissions-cutting after-treatment system in its proprietary big-bore engines.

Navistar decided to shift away from in-house production because its truck engines did not fully satisfy Environmental Protection Agency standards. The EPA increased fines for such non-compliance to nearly double the previous level.

Navistar's troubles in developing proprietary engines have cost the company hundreds of millions of dollar, significantly reduced its market share, eroded its stock price, and led to the resignation of its CEO. They also brought the attention of activist investor Carl Icahn, who has amassed a significant stake in the firm and so far has two associates on the board of directors.

The terms of the agreements were not disclosed. Navistar stock closed up $0.81, or 4%, to $19.85 on the day the news was announced. Cummins also advanced, by $1.57, 1.7%, to $93.50.

Eric Volkman has no positions in the stocks mentioned above. The Motley Fool owns shares of Cummins. Motley Fool newsletter services recommend Cummins. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2070424, ~/Articles/ArticleHandler.aspx, 10/24/2014 7:23:01 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement