Navistar Shares Up on Rumor of Paccar Bid

The “old economy” showed Monday that it can still generate a little stock excitement.

Navistar International Corp. shares (NAV) soared $6.56 to $36.50 on the NYSE on a report that the third-largest truck maker might be a takeover target.

Market rumors were that Navistar had received a conditional purchase offer from rival Paccar Inc. But Paccar (PCAR) later said it “has not made a bid.”

Paccar, whose shares rose on Nasdaq $1.06 to close at $38.13 on Monday, is the maker of Kenworth and Peterbilt trucks. Stark’s Truck & Off-Highway Ledger said Paccar had offered to buy Navistar’s truck, bus and engine assets.

Paccar Treasurer Ron Ranheim said in an interview that his company didn’t bid for “any portion of Navistar. The speculative story reported in Stark’s is not true.”

He declined to say whether Paccar might seek to buy all or part of Navistar. Stark’s reported in August that Paccar was in early stage talks to buy Navistar’s truck operations, though not its engine business.

“A Paccar and Navistar combination has tremendous strategic logic, but that being said, they have to figure out how to get it done,” said CIBC World Markets analyst Charles Harris, who has a “strong buy” rating on Paccar’s shares. “Paccar is limited by its balance sheet.”

Navistar is suffering from slow sales amid the weaker economy and a glut in the used-truck market. Navistar investors who held as much as 30% of the shares outstanding urged the company this year to consider ways to boost the stock, including a possible sale. The company is believed to have been in talks in 1999 with Volvo of Sweden.