Navistar shares soar on Icahn's bigger stake

Shares of Navistar International Corp. rose nearly 20 percent on Friday, after Carl Icahn raised his stake in the company and the head of Italian truckmaker Fiat Industrial said he was interested in the U.S. truck market.

The rebound in shares of the U.S. truck and engine maker reversed Navistar's stock plunge on Thursday, when an unexpected quarterly loss and word of another delay in regulatory approval for the company's new model of truck engine sent shares to a three-year-low. Icahn, a billionaire investor known for shaking up companies and advocating sales, recently pushed for a merger between Navistar and rival Oshkosh Truck Corp, in which he also owns a stake.

On Friday, Icahn disclosed in a filing with the U.S. Securities and Exchange Commission that he had increased his stake in Navistar to 11.87 percent from 9.99 percent. Analysts said this indicates that the activist investor retains an interest in the future of the Lisle, Illinois-based company. Icahn did not return a call seeking comment.

Fiat Chairman Sergio Marchionne on Friday suggested he was interested in Navistar. "We are interested in building our presence in the U.S. truck market," Marchionne told reporters when asked if Fiat was interested in bidding for Navistar. Asked if there were specific talks ongoing between the two companies, Marchionne replied, "none that I am willing to share." Navistar spokeswoman Karen Denning declined to respond to Marchionne's comments.

But Marchionne's interest could flush out other bidders, whether rival companies or private equity players, who are interested in Navistar, said analyst Robert Wertheimer of Vertical Research Partners. "Things will start to happen more quickly," Wertheimer said. "I do think Navistar is an attractive asset ...It really doesn't make sense for it to stay trading so low."

Wertheimer cited Volkswagen AG as another company that could be interested in boosting its presence in the North American truck business.

Volkswagen officials declined to comment. Navistar shares were up 19.4 percent at $28.79 on Friday afternoon, making them one of the top gainers on the New York Stock Exchange.

OSHKOSH OFF THE TABLE

While it was unclear what other companies, if any, might consider bidding for Navistar, analysts said they did not regard a second attempt to merge Navistar and Oshkosh as likely. While Navistar Chief Executive Dan Ustian had been open to the idea, Oshkosh management and investors resisted it, with Oshkosh shareholders voting down an Icahn-backed slate of directors in January.

"I don't think there's a lot of logic in putting the two companies together," Leiker said. Oshkosh spokesman John Daggett said on Friday the company's position had not changed. Icahn holds a roughly 10 percent stake in Oshkosh.

TECHNOLOGY TROUBLES

Navistar's Thursday stock slide followed an unexpected second-quarter loss after the company took a $104 million charge to cover the rising cost of repairing engines sold in 2010 and 2011. That caught investors off-guard as Navistar management in March said that the warranty costs had peaked, only those them surge higher in April.

It also warned of new delays in its quest for regulatory approval for a new diesel engine design. Analysts called on Navistar, which makes International heavy trucks, Monaco motorhomes and school buses, to rethink its focus on that design, which uses a novel technology to cut emissions of nitrogen oxide, a pollutant associated with asthma.