Navistar International (NAV) PREM14APreliminary proxy related to merger

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Navistar International Corporation

(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

Common stock, $0.10 par value (“common stock”)
Series D Cumulative Convertible Junior Preference Stock, $1.00 par value (“Series D Stock”)

As of December 17, 2020, (A) 99,602,271 shares of common stock; (B) 21,931.88 shares of common stock underlying 70,182 shares of Series D Stock; (C) 980,029 shares of common stock underlying options with an exercise price below the per share merger consideration of $44.50; and (D) 366,106 shares of common stock underlying company restricted stock awards.

2021 Proxy Statement

Solely for the purpose of calculating the filing fee, the underlying value of the transaction was calculated as the sum of: (A) 99,602,271 shares of common stock less 16,629,667 shares of common stock owned by Parent and its subsidiaries, multiplied by $44.50; (B) 70,182 shares of Series D Stock, multiplied by 0.3125 (which is the conversion rate of Series D Stock to common stock), multiplied by $44.50; (C) 980,029 shares of common stock, which is the total of 1,346,135 shares issuable upon the exercise of the Company’s outstanding options, warrants and rights minus 306,515 RSUs, 31,091 DSUs, and 28,500 PSUs, issuable upon the exercise of stock options with an exercise price less than $44.50, multiplied by $10.34 (which is the difference between $44.50 and the weighted average exercise price of $34.16 for such options, warrants and rights); and (D) 366,106 shares of common stock underlying restricted stock units, which is the sum of 306,515 RSUs, 31,091 DSUs and 28,500 PSUs, multiplied by $44.50.

$3,719,682,063.30.

$405,817.31, determined, in accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, by multiplying .0001091 by the proposed maximum aggregate value of the transaction of $3,719,682,063.30.

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LETTER TO STOCKHOLDERS

[●], 2021

Dear Navistar Stockholder:

On behalf of the board of directors (the “Board”) of Navistar International Corporation (the “Company” or “Navistar”), you are cordially invited to attend our 2021 Annual Meeting of Stockholders (the “Annual Meeting”). The Annual Meeting will be held virtually on [●], [●], 2021, at [●] [a.m.], Central Time.

In light of the ongoing coronavirus (“COVID-19”) pandemic, for the safety of our stockholders and in accordance with federal, state and local guidance limiting group gatherings, the Annual Meeting will be held in a virtual meeting format only, and there will not be a physical meeting location. You will be able to attend, vote and submit questions during the virtual Annual Meeting online by visiting www.virtualshareholdermeeting.com/NAV2021.

The Annual Meeting will be held for the purpose of Navistar stockholders considering and voting on the following proposals:

On November 7, 2020, the Company, Parent and Merger Sub entered into the Merger Agreement. The Merger Agreement provides for, among other things, the acquisition by Parent of the Company through the merger of Merger Sub with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and a wholly owned indirect subsidiary of Parent.

If the Merger is completed, you will be entitled to receive $44.50 in cash, without interest, for each share of the Company’s common stock owned by you, which represents a premium of approximately 84.88% to the closing price of the Company’s common stock as of January 30, 2020, the last trading day prior to the announcement by Parent of its unsolicited offer to acquire the Company for $35.00 per share, and a 58.14% premium to the volume-weighted average price of shares of the Company’s common stock for the 30 trading days ended January 30, 2020, a premium of approximately 24.16% to the closing price of the Company’s common stock as of September 9, 2020, the last trading day prior to the Company’s confirmation of a revised proposal from Parent to acquire the Company for $43.00 per share and a premium of approximately 2.6% to the closing price of the Company’s common stock as of November 6, 2020, the last trading day prior to the public announcement of the execution of the Merger Agreement.

Concurrently with the execution of the Merger Agreement, certain stockholders of the Company affiliated with Carl C. Icahn (collectively, the “Icahn Stockholders”), and certain stockholders of the Company affiliated with Mark H. Rachesky (collectively, the “MHR Stockholders”) entered into voting and support agreements with Parent and Merger Sub (the “Voting Agreements”), pursuant to which the Icahn Stockholders and the MHR Stockholders have agreed to, among other things, vote in favor of the adoption of the Merger Agreement and the transactions contemplated by the Merger Agreement. As of December 17, 2020, the Icahn Stockholders collectively own approximately 16.8% of the outstanding shares of the Company’s common stock, and the MHR Stockholders collectively own approximately 16.4% of the outstanding shares of the Company’s common stock. Additionally, as of December 17, 2020, Parent and its affiliates collectively own approximately 16.7% of the outstanding shares of the Company’s common stock which, pursuant to the Merger Agreement, Parent has committed to vote in favor of the adoption of the Merger Agreement and the transactions contemplated by the Merger Agreement.

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The Board has determined that the Merger and the other transactions contemplated by the Merger Agreement are fair to, and in the best interest of, the Company and the stockholders of the Company and approved and declared advisable the Merger Agreement, the Merger, the other transactions contemplated by the Merger Agreement and the Voting Agreements. The Board made its determination after consultation with its legal and financial advisors and consideration of a number of factors.

Approval of the proposal to adopt the Merger Agreement requires the affirmative vote of a majority of the shares of our common stock outstanding and entitled to vote on such proposal. The affirmative vote of a majority of the shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on the non-binding advisory vote on certain compensation arrangements for the Company’s named executive officers in connection with the Merger will constitute the stockholders’ non-binding advisory approval of the Merger Compensation Proposal. The approval of each of the director nominees named in the accompanying proxy statement requires the affirmative vote of a plurality of the shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on each director nominee in such proposal. The affirmative vote of a majority of shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on the non-binding, advisory vote on executive compensation as disclosed in the accompanying proxy statement will constitute the stockholders’ non-binding advisory approval of such proposal. The approval to ratify the appointment of the Company’s independent registered public accounting firm requires the affirmative vote of a majority of the shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on such proposal.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT.

Your vote is very important. Whether or not you plan to attend the Annual Meeting virtually, please submit your proxy by telephone, scanning your QR Code or via the Internet, or, if you request that the proxy materials be mailed to you, please complete, date, sign and return, as promptly as possible, the enclosed proxy card in the accompanying postage-paid reply envelope. If you virtually attend the Annual Meeting and vote your shares at the meeting electronically, your vote by ballot will revoke any proxy previously submitted. You may revoke your proxy before the Annual Meeting, by voting by telephone, scanning your QR Code or over the Internet (only your latest telephone, QR Code or Internet vote is counted) or by signing a new proxy and mailing it, in each case, in accordance with the instructions on the enclosed proxy card. In addition, you may revoke your proxy by attending the Annual Meeting virtually, requesting that your proxy be revoked and voting your shares electronically at the Annual Meeting; however, attending the Annual Meeting virtually will not revoke your telephone vote, QR Code vote or Internet vote or proxy, as the case may be, unless you specifically request it. If you fail to return your proxy card, submit your proxy by telephone, scanning your QR Code or via the Internet or vote your shares electronically at the Annual Meeting, your shares of our common stock will NOT be counted for purposes of determining whether a quorum is present at the Annual Meeting and will have the same effect as a vote “AGAINST” approval of the proposal to adopt the Merger Agreement. If you fail to return your proxy card, submit your proxy by telephone, scanning your QR Code or via the Internet or vote your shares electronically at the Annual Meeting, your shares of our common stock will not have an effect on the Merger Compensation Proposal, the Election of Directors Proposal, the Say-On-Pay Proposal and the Adjournment Proposal.

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If your shares of our common stock are held in “street name” by your bank, brokerage firm or other nominee, your bank, brokerage firm or other nominee will be unable to vote your shares of our common stock without instructions from you except for with respect to “routine” matters. You should instruct your bank, brokerage firm or other nominee to vote your shares of our common stock in accordance with the procedures provided by your bank, brokerage firm or other nominee. If your shares are held in “street name” by your bank, brokerage firm or other nominee and you fail to instruct your bank, brokerage firm or other nominee to vote your shares of common stock, your shares of our common stock will still be counted for purposes of determining whether a quorum is present at the Annual Meeting and will have the same effect as a vote “AGAINST” approval of the proposal to adopt the Merger Agreement. If your shares are held in “street name” by your bank, brokerage firm or other nominee and you fail to instruct your bank, brokerage firm or other nominee to vote your shares of common stock, your shares of our common stock will not have an effect on the Merger Compensation Proposal, the Election of Directors Proposal, the Say-On-Pay Proposal and the Adjournment Proposal.

The accompanying proxy statement provides you with detailed information about the Annual Meeting, the Merger Agreement and each of the proposals to be voted upon by our stockholders. The Merger cannot be completed unless the Merger Agreement is adopted by the affirmative vote of the holders of a majority of the outstanding shares of Navistar common stock entitled to vote on the proposal to adopt the Merger Agreement. A copy of the Merger Agreement is attached as Annex A to the proxy statement and is incorporated by reference therein, and copies of the Voting Agreements are attached as Annex B and Annex C to the proxy statement and are incorporated by reference therein. We encourage you to read the entire proxy statement and its annexes, including the Merger Agreement and the Voting Agreements, carefully. You may also obtain additional information about Navistar from documents we have filed with the Securities and Exchange Commission.

Stockholders who do not vote in favor of the proposal to approve the Merger Agreement, and who object in writing to the Merger prior to the Annual Meeting and comply with all of the applicable requirements of the Delaware General Corporation Law, which are summarized in the section entitled “Appraisal Rights” in the accompanying proxy statement and reproduced in its entirety as Annex D to this proxy statement, will be entitled to rights of appraisal to obtain the fair value of their shares of common stock of the Company.

Your vote is very important to us. Regardless of the number of shares you own and whether or not you attend the Annual Meeting, please vote. You may vote at the virtual meeting, by toll-free telephone, scanning your QR Code, via the Internet or, if you request that the proxy materials be mailed to you, by completing, dating and signing the proxy card and returning it in the envelope provided. No postage is required if the proxy card is mailed in the United States. If you decide to attend the Annual Meeting virtually and vote your shares virtually at the Annual Meeting, your vote will revoke any proxy previously submitted.

The Board has fixed the close of business on [●], 2021 as the record date for determination of stockholders entitled to receive notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof. Only stockholders of record as of the close of business on the record date are entitled to receive notice of, and to vote at (electronically or by proxy), the Annual Meeting and at any adjournment or postponement thereof. You will be entitled to one vote for each share of the Company’s common stock that you owned on the record date. A complete list of our stockholders of record entitled to vote at the Annual Meeting will be available for inspection at our principal executive offices at 2701 Navistar Drive, Lisle, Illinois 60532 at least ten days prior to the date of the Annual Meeting and continuing through the Annual Meeting for any purpose germane to the meeting. A stockholder may send a written request to our Corporate Secretary at corporate.secretary@navistar.com for an electronic copy of the list of our stockholder of record for inspection prior to the Annual Meeting. The list will also be available in electronic form at the Annual Meeting for inspection by any stockholder present virtually at the Annual Meeting.

Only stockholders of record (including “street name” stockholders who can show that they beneficially owned our common stock on the record date), their duly appointed proxy holders and our guests may attend the virtual Annual Meeting. If you are a stockholder of record, you will need your assigned 16-digit control number provided in your Notice of Internet Availability of Proxy Materials, your proxy card, voting instruction form, or other applicable proxy notices to attend and vote your shares electronically at the virtual Annual Meeting. If you hold your shares in “street name” through a bank, brokerage firm or other nominee, your assigned 16-digit control number should be included with the voting instructions received from your bank, brokerage firm or other nominee. If your bank, brokerage firm or other nominee has not provided you with a 16-digit control number, please contact them for instructions on how to attend the virtual Annual Meeting and vote your shares.

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If you have any questions or need assistance voting your shares of Navistar common stock, please contact Alliance Advisors LLC, our proxy solicitor, by calling toll-free at 833-550-0986. Banks and brokers should also contact Alliance Advisors by calling toll-free at 833-550-0986. We look forward to seeing you at the Annual Meeting.

	Cordially,
	Troy A. Clarke
	Executive Chairman
	Persio V. Lisboa
	President and Chief Executive Officer
	Walter G. Borst
	Executive Vice President and Chief Financial Officer

The proxy statement is dated [●], 2021, and is first being mailed on or about [●], 2021 to our stockholders who owned shares of Navistar common stock as of the close of business on [●], 2021.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THE ACCOMPANYING PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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				To our stockholders:   On behalf of the Board of Directors of Navistar International Corporation, you are cordially invited to attend our 2021 Annual Meeting of Stockholders.
	When   [●], 2021, [●] [a.m.] — Central Time
				Voting Matters		Board Recommendation		Page
				Proposal 1: To adopt the Merger Agreement			FOR	49
	Where   Held Virtually   Whether or not you plan to attend virtually the 2021 Annual Meeting of Stockholders, please vote your proxy either by mail, telephone, scanning your QR Code or over the Internet.			Proposal 2: To approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the Merger			FOR	135
				Proposal 3:   To elect as directors the nominees named in the accompanying proxy statement			FOR each director nominee	139
				Proposal 4:   To act on an advisory vote on executive compensation as disclosed in the accompanying proxy statement			FOR	167
	How to vote     Virtually at the Annual Meeting:   Stockholders who obtain their 16-digit control number can attend the Annual Meeting virtually and vote at the Annual Meeting.     Via the Internet:   http://www.proxyvote.com     By Mail:   Complete, sign and mail the enclosed proxy card.     By Telephone (Toll Free):   1-800-690-6903     Via Mobile Phone:   Scan your QR Code with your mobile phone.			Proposal 5:   To ratify the appointment of our independent registered public accounting firm			FOR	218
				Proposal 6:    To approve the adjournment or postponement of the Annual Meeting, if necessary, to continue to solicit votes for the Merger Proposal			FOR	221
				We will also act upon any other matters properly brought before the Annual Meeting.    We plan to send a Notice of Internet Availability of Proxy Materials on or about [●], 2021. The Notice of Internet Availability of Proxy Materials contains instructions on how to access our materials on the Internet, as well as instructions on obtaining a paper copy of the proxy materials. The Notice of Internet Availability of Proxy Materials is not a form for voting and presents only an overview of the proxy materials.   In order to attend our 2021 Annual Meeting of Stockholders virtually, you must have your assigned 16-digit control number. Procedures for obtaining your assigned 16-digit control number are detailed in the accompanying proxy statement. Attendance and voting is limited to stockholders of record at the close of business on [●], 2021. If you are the representative of a corporate or institutional stockholder, you must have their assigned 16-digit control number provided on their proxy card, voting instruction form or other applicable proxy notices.   By Order of the Board of Directors,
					RICHARD E. BOND  Secretary

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TABLE OF CONTENTS

2701 Navistar Drive
Lisle, Illinois 60532

PROXY STATEMENT

Annual Meeting of Stockholders

INTRODUCTION

This proxy statement is being furnished to the stockholders of Navistar International Corporation, a Delaware corporation, (“we”, “our”, the “Company” or “Navistar”) in connection with the solicitation of proxies by our board of directors (the “Board”), for use at a virtual annual meeting of stockholders and at any adjournments thereof (the “Annual Meeting”). Stockholders will be asked:

A copy of the Merger Agreement is attached as Annex A to this proxy statement. Pursuant to the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and a wholly owned indirect subsidiary of Parent.

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PROXY SUMMARY

PROXY SUMMARY

The following summary highlights selected information in this proxy statement and may not contain all the information that may be important to you. Accordingly, we encourage you to read carefully this entire proxy statement, its annexes and the documents referred to in this proxy statement. Each item in this summary includes a page reference directing you to a more complete description of that topic. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions under “Where You Can Find More Information” beginning on page 246 of this proxy statement.

Company Overview

Navistar International Corporation, incorporated under the laws of the State of Delaware in 1993, is a holding company whose principal operating entities are Navistar, Inc. and Navistar Financial Corporation (“NFC”). Navistar’s fiscal year ends October 31 and as such all references to a year refer to the applicable fiscal year unless stated otherwise.

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PROXY SUMMARY

SUMMARY ABOUT THE ANNUAL MEETING (PAGE 43)

Time, Place and Purpose of the Annual Meeting (Page 43)

This proxy statement is being furnished to our stockholders as part of the solicitation of proxies by the Board for use at the Annual Meeting, which will be held virtually, without a physical meeting location, on [●], 2021 at [●] [a.m.], Central Time.

At the Annual Meeting, holders of our common stock, $0.10 par value of the Company (the “common stock”) will be asked to approve each of the following: the Merger Proposal, the Merger Compensation Proposal, each director nominee in the Election of Directors Proposal, the Say-On-Pay Proposal, the Ratification of Independent Accounting Firm Proposal and the Adjournment Proposal.

Record Date and Quorum (Page 43)

You are entitled to receive notice of, and to vote at, the Annual Meeting if you owned shares of our common stock at the close of business on [●], 2021, which the Board has set as the record date for the Annual Meeting. As of the close of business on the record date, there were [●] shares of common stock outstanding. Each holder of our common stock is entitled to cast one vote per such share. The presence at the Annual Meeting, virtually or represented by proxy, of the holders of one-third of the shares of our common stock issued and outstanding and entitled to vote at the Annual Meeting, constitutes a quorum for the transaction of business at the Annual Meeting. Abstentions and broker non-votes (as defined in the section entitled “The Annual Meeting—Vote Required” beginning on page 44) are counted as present for the purpose of determining whether a quorum is present.

Vote Required (Page 44)

The vote required depends on each proposal.

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PROXY SUMMARY

As of the record date, the directors and executive officers of the Company beneficially owned and were entitled to vote, in the aggregate, [●] shares of our common stock (not including any shares of our common stock deliverable upon exercise or conversion of any options, stock appreciation rights, or restricted shares), representing approximately [●]% of the outstanding voting power of our common stock. The directors and officers have informed the Company that they currently intend to vote all such shares of our common stock “FOR” approval of the Merger Proposal, “FOR” approval of the Merger Compensation Proposal, “FOR” approval of the Say-On-Pay Proposal, “FOR” approval of the Ratification of Independent Accounting Firm Proposal and “FOR” the approval of the Adjournment Proposal. See the sections entitled “The Voting Agreements” beginning on page 133; see also the sections entitled “Persons Owning more than Five Percent of Company Common Stock” and “Company Common Stock Owned by Executive Officers and Directors” beginning on pages 223 and 225, respectively.

Proxies and Revocation (Page 46)

Any stockholder of record entitled to vote at the Annual Meeting may vote virtually by attending the virtual Annual Meeting or submitting a proxy over the Internet, scanning your QR Code, by telephone, or by mail using the enclosed postage paid envelope. If you are a beneficial owner of our common stock and your shares are held in street name, you should instruct your bank, brokerage firm or other nominee on how to vote your shares of our common stock using the instructions provided by your bank, brokerage firm or other nominee. Banks, brokerage firms or other nominees who hold shares in street name for customers have the authority to vote on “routine” proposals when they have not received instructions from beneficial owners, such as the Ratification of Independent Accounting Firm Proposal. However, banks, brokerage firms and other nominees are precluded from exercising their voting discretion with respect to approving non-routine matters, such as the Merger Proposal, the Merger Compensation Proposal, the Election of Directors Proposal, the Say-On-Pay Proposal and the Adjournment Proposal, and, as a result, absent specific instructions from the beneficial owner of such shares of our common stock, banks, brokerage firms or other nominees are not empowered to vote those shares of our common stock on those non-routine matters. With respect to the Merger Proposal, if you fail to submit a proxy or to vote virtually at the Annual Meeting, or do not provide your bank, brokerage firm or other nominee with instructions, as applicable, your shares of our common stock will not be voted on the Merger Proposal, which will have the same effect as a vote “AGAINST” approval of the respective proposal. With respect to the Merger Compensation Proposal, the Election of Directors Proposal, the Say-On-Pay Proposal and the Adjournment Proposal, if you fail to submit a proxy or to vote virtually at the Annual Meeting, or do not provide your bank, brokerage firm or other nominee with instructions, as applicable, and your shares of our common stock will not have an effect on the respective proposal.

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PROXY SUMMARY

You have the right to revoke a proxy. If your shares are registered directly in your name, you may revoke your proxy or change your vote at any time before the Annual Meeting, by voting over the Internet, scanning your QR Code or by telephone, signing a new proxy and mailing it, by attending the virtual Annual Meeting and voting your shares virtually, or by requesting that your proxy be revoked. If you hold shares in “street name” through a bank, brokerage firm or other nominee, you may submit a new, later-dated voting instruction form or contact your bank, brokerage firm or other nominee or vote virtually at the Annual Meeting if you obtain a legal proxy, as described in the section entitled “The Annual Meeting—Vote Required” beginning on page 44.

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PROXY SUMMARY

SUMMARY OF PROPOSAL 1 – MERGER PROPOSAL

Your Board of Directors recommends a vote FOR the adoption of the Merger Agreement and transactions contemplated thereby.

Parties to the Merger (Page 49)

Navistar International Corporation

Navistar is an international manufacturer of International brand commercial trucks, proprietary diesel engines, and IC Bus^® brand school and commercial buses, as well as a provider of service parts for trucks and diesel engines. The Company also provides retail, wholesale, and lease financing services for its trucks and parts. The Company operates as four principal industry segments: Trucks, Parts, Global Operations and Financial Services.

TRATON SE

TRATON SE, which we refer to as “Parent” or “TRATON” in this proxy statement, is a Societas Europaea, whose shares are listed for trading on the Frankfurt Stock Exchange, and Nasdaq Stockholm, each under the symbol “8TRA”. As of December 17, 2020, Parent beneficially owns approximately 16.7% of the issued and outstanding shares of Company common stock. Parent is an indirect subsidiary of Volkswagen Aktiengesellschaft (“Volkswagen AG”) and its principal business purpose is the holding of investments in companies whose business purpose is the manufacturing and distribution of vehicles and engines of any kind, as well as such items’ ancillary equipment and all plants, machinery, tools, and other technical products.

Dusk Inc.

Dusk Inc., a Delaware corporation and a wholly owned indirect subsidiary of Parent, which we refer to as “Merger Sub” in this proxy statement, was formed solely for the purposes of effecting the Merger. Merger Sub has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the Merger Agreement and the Voting Agreements.

The Merger (Page 69)

The Merger Agreement provides that Merger Sub will merge with and into the Company. Upon the filing of the certificate of merger with the Delaware Secretary of State, at which time the Merger shall become effective (the “Effective Time”), Merger Sub will cease to exist and the Company will continue as the surviving corporation following the Merger. As a result of the Merger, the Company will cease to be a publicly traded company and will become a wholly owned indirect subsidiary of Parent. You will not own any shares of the capital stock of the surviving corporation.

Merger Consideration (Page 69)

In the Merger, each outstanding share of our common stock will automatically be converted into the right to receive an amount in cash equal to $44.50 (the “Common Merger Consideration”), without interest, other than shares of our common stock (i) owned by (x) Parent or any of its subsidiaries; or (y) the Company as treasury stock, which shares in clauses (x) and (y) we refer to as “excluded shares”; and (ii) stockholders who have not voted in favor of the Merger and properly and validly perfected their statutory rights of appraisal in accordance with Section 262 of the Delaware General Corporation Law (the “DGCL”), which shares we refer to as “dissenting shares,” which shares will be canceled without payment of any consideration therefor and will cease to exist.

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PROXY SUMMARY

The sole share of Series B Nonconvertible Junior Preference Stock, $1.00 par value (the “Series B Stock”), issued and outstanding immediately prior to the Effective Time, will be unaffected by the Merger and will remain outstanding as one share of Series B Stock of the surviving corporation with the same rights, powers, preferences and privileges attributable to the sole share of Series B Stock immediately prior to the Effective Time.

Each share of Series D Convertible Junior Preference Stock, $1.00 par value (the “Series D Stock”) outstanding immediately prior to the Effective Time will be converted into an amount in cash, without interest, equal to the portion of the Common Merger Consideration that would have been payable in respect of such share of Series D Stock had such share converted into our common stock pursuant to the terms of the certificate of incorporation of the Company immediately prior to the Effective Time (together with the Common Merger Consideration, the “Merger Consideration”).

Reasons for the Merger; Recommendation of the Company’s Board of Directors (Page 83)

After careful consideration of various factors described in the section entitled “The Merger—Reasons for the Merger; Recommendation of the Company’s Board of Directors” beginning on page 83, the Board has determined that the Merger and the other transactions contemplated by the Merger Agreement are fair to, and in the best interests of, the Company and the Company’s stockholders and approved and declared advisable the Merger Agreement and the Merger and the other transactions contemplated by the Merger Agreement. The Board has also resolved that the Merger Agreement be submitted for consideration by the stockholders of the Company at the Annual Meeting and recommended that the stockholders of the Company vote to adopt the Merger Agreement. The Board consulted with the Company’s outside financial and legal advisors and senior management at various times and considered a number of factors that the Board believes support its decision.

In considering the recommendation of the Board with respect to the Merger Proposal, you should be aware that our directors and executive officers have interests in the Merger that are different from, or in addition to, yours. The Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Merger Agreement and the Merger, and in recommending that the Merger Agreement be adopted by the stockholders of the Company. See “The Merger—Interests of Certain Persons in the Merger” beginning on page 104.

The Board recommends that you vote “FOR” approval of the Merger Proposal and “FOR” approval of the Merger Compensation Proposal.

Purchaser Group Members’ Purposes and Reasons for the Merger (Page 50)

The “Purchaser Group Members” means (i) Parent, (ii) Merger Sub, (iii) Volkswagen AG and (iv) TRATON US Inc., a Delaware corporation and indirect wholly owned subsidiary of Parent. In the course of reaching its decision to approve the Merger Agreement and the transactions contemplated thereby, including the Merger, the executive board of Parent (“Parent’s Executive Board”) and the supervisory board of Parent (“Parent’s Supervisory Board”, and together with Parent’s Executive Board, “Parent’s Boards”), the management board of Volkswagen AG (the “Volkswagen Management Board”) and the supervisory board of Volkswagen AG (the “Volkswagen Supervisory Board”) and the Purchaser Group Members considered a number of factors in its deliberations. Those factors are described in “Special Factors—Purchaser Group Members’ Purposes and Reasons for the Merger” beginning on page 50.

Plans for the Company After the Merger (Page 52)

It is expected that the Company’s operations will be conducted after the Merger substantially as they currently are being conducted, except that it will cease to be a publicly traded company and will instead be a privately held indirect subsidiary of Parent as further described in “Special Factors—Plans for the Company after the Merger” beginning on page 52.

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PROXY SUMMARY

Position of the Purchaser Group Members as to Fairness of the Merger (Page 52)

The Purchaser Group Members believe that the Merger is substantively and procedurally fair to the Company’s unaffiliated stockholders. However, none of the Purchaser Group Members nor any of their respective affiliates (other than the Board) has performed, or engaged a financial advisor to perform, any valuation or other analysis for purposes of assessing the fairness of the Merger to the Company and the Company’s unaffiliated stockholders. The belief of the Purchaser Group Members as to the procedural and substantive fairness of the Merger is based on the factors discussed in “Special Factors—Position of the Purchaser Group Members as to the Fairness of the Merger” beginning on page 52.

Opinion of J.P. Morgan Securities LLC (Page 88)

The Company retained J.P. Morgan Securities LLC (“J.P. Morgan”) as a financial advisor in connection with the proposed Merger. In connection with the engagement, the Board requested that J.P. Morgan evaluate the fairness, from a financial point of view, of the consideration to be paid in the Merger to holders of the Company’s common stock.

In connection with the Merger, at the meeting of the Board on November 7, 2020, J.P. Morgan rendered its oral opinion to the Board that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the Merger Consideration to be paid to the holders of the Company’s common stock in the proposed Merger was fair, from a financial point of view, to such stockholders. J.P. Morgan subsequently confirmed its November 7, 2020 oral opinion by delivering its written opinion to the Board, dated November 7, 2020.

The full text of the written opinion of J.P. Morgan which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Annex E to this proxy statement and is incorporated herein by reference. The Company’s stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the Board and in connection with and for the purposes of its evaluation of the proposed Merger, was directed only to the consideration to be paid in the Merger and did not address any other aspect of the Merger. J.P. Morgan expressed no opinion as to the fairness of the Merger Consideration to the holders of any class of securities, creditors or other constituencies of the Company or as to the underlying decision by Company to engage in the proposed Merger. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The summary of the opinion of J.P. Morgan set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion. The opinion does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote with respect to the proposed Merger or any other matter. The full text of J.P. Morgan’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by J.P. Morgan in preparing its opinion.

Opinion of PJT Partners LP (Page 90)

The Company retained PJT Partners LP (“PJT Partners” and together with J.P. Morgan, the “Financial Advisors”) as a financial advisor to the Company in connection with the proposed Merger. In connection with the engagement, the Board requested that PJT Partners evaluate the fairness, from a financial point of view, of the consideration to be paid in the Merger to holders of the Company’s common stock.

At a meeting of the Board on November 7, 2020, PJT Partners rendered its oral opinion, subsequently confirmed in its written opinion dated November 7, 2020, that, as of the date thereof and based upon and subject to, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations of the review undertaken by PJT Partners in connection with the opinion (which are stated in its written opinion), the Merger Consideration to be received by the holders of Company common stock was fair to such holders from a financial point of view.

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The full text of PJT Partners’ written opinion delivered to the Board, dated November 7, 2020, is attached as Annex F and incorporated into this proxy statement by reference in its entirety. PJT Partners’ written opinion has been provided by PJT Partners at the request of the Board and is subject to, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations upon the review undertaken by PJT Partners in connection with the opinion (which are stated therein). You are encouraged to read the opinion carefully in its entirety. PJT Partners provided its opinion to the Board in its capacity as such, in connection with and for purposes of its evaluation of the Merger only and PJT Partners’ opinion addressed only the fairness, from a financial point of view, as of the date thereof, to the holders of Company common stock of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. PJT Partners’ opinion did not address any other term, aspect or implication of the Merger Agreement, the Voting Agreements or any other agreement or understanding entered into in connection with the Merger or otherwise and does not constitute a recommendation as to any action the Board should take with respect to the Merger or how any holder of the Company common stock should vote or act with respect to the Merger or any other matter. The summary of the PJT Partners opinion contained in this proxy statement is qualified in its entirety by reference to the full text of PJT Partners’ written opinion. The full text of PJT Partners’ written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by PJT Partners in preparing its opinion.

Opinion of Bank of America Europe DAC (Page 55)

In connection with the Merger, Bank of America Europe DAC (“BofA Securities”), TRATON’s financial advisor, delivered to Parent’s Supervisory Board and Parent’s Executive Board a written opinion, dated November 7, 2020, as to the fairness, from a financial point of view and as of the date of the opinion, to Parent of the consideration to be paid by Parent in the Merger. The full text of the written opinion, dated November 7, 2020, of BofA Securities, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Annex G to this proxy statement and is incorporated by reference herein in its entirety.

BofA Securities provided its opinion to Parent’s Boards (in their capacities as such) for the benefit and use of Parent’s Boards in connection with and for purposes of their evaluation of the Merger. BofA Securities’ opinion does not address any other aspect of the Merger and no opinion or view was expressed as to the relative merits of the Merger in comparison to other strategies or transactions that might be available to Parent or in which Parent might engage or as to the underlying business decision of Parent to proceed with or effect the Merger. BofA Securities’ opinion does not constitute a recommendation to any stockholder as to how to vote or act in connection with the proposed Merger or any other matter.

Opinion of Goldman Sachs Bank Europe SE (Page 62)

Goldman Sachs Bank Europe SE delivered its opinion to Parent’s Executive Board and Parent’s Supervisory Board that, as of November 7, 2020 and based upon and subject to the factors and assumptions set forth therein, the $44.50 in cash per share of the Company’s common stock to be paid by Parent pursuant to the Merger Agreement was fair from a financial point of view to Parent. The full text of the written opinion of Goldman Sachs Bank Europe SE, dated November 7, 2020, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex H. The summary of Goldman Sachs Bank Europe SE’s opinion contained in this proxy statement is qualified in its entirety by reference to the full text of Goldman Sachs Bank Europe SE’s written opinion.

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PROXY SUMMARY

Goldman Sachs Bank Europe SE provided advisory services and its opinion for the information and assistance of Parent’s Executive Board and Parent’s Supervisory Board in connection with their consideration of the Merger. The Goldman Sachs Bank Europe SE opinion is not a recommendation as to how any holder of shares of Navistar’s common stock should vote with respect to the Merger, or any other matter. Pursuant to an engagement letter between Parent and Goldman Sachs Bank Europe SE, Parent has agreed to pay Goldman Sachs Bank Europe SE a transaction fee of €12,500,000, all of which is contingent upon consummation of the Merger.

Financing of the Merger (Page 103)

The Company and Parent estimate that the total amount of funds required to complete the Merger and related transactions and pay related fees and expenses will be approximately $3,800,000,000. The Merger is not subject to any financing condition, however, to finance the Merger Consideration and ancillary costs, Volkswagen International Luxemburg S.A., a wholly owned indirect subsidiary of Volkswagen AG, agreed to provide to Parent an unsecured committed loan in a maximum aggregate amount of EUR 3,300,000,000. No new loan agreement has been entered into with any third party to finance the Merger Consideration.

Interests of Certain Persons in the Merger (Page 104)

In considering the recommendation of the Board that you vote to adopt the Merger Agreement, you should be aware that aside from their interests as Company stockholders, the Company’s directors and executive officers have interests in the Merger that are different from, or in addition to, those of Company stockholders generally. These interests include, among others:

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PROXY SUMMARY

Members of the Board were aware of and considered these interests, among other matters, in evaluating and negotiating the Merger Agreement and the Merger, and in recommending to our stockholders that the Merger Agreement be adopted. For additional information, see the sections entitled “The Merger—Background of the Merger” beginning on page 69 and “The Merger—Reasons for the Merger; Recommendation of the Company’s Board of Directors” beginning on page 83. These interests are described in more detail below, and certain of them are quantified in the narrative and in the section entitled “Proposal 2—Merger Compensation Proposal—Golden Parachute Compensation” beginning on page 135.

Material U.S. Federal Income Tax Consequences of the Merger (Page 107)

The exchange of shares of our common stock for cash pursuant to the Merger generally will be a taxable transaction to U.S. holders (as defined in “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” on page 107) for U.S. federal income tax purposes. Stockholders who are U.S. holders will generally recognize gain or loss in an amount equal to the difference, if any, between the amount of cash received with respect to such shares and their adjusted tax basis in their shares of our common stock. Under U.S. federal income tax law, U.S. holders may be subject to information reporting on cash received in the Merger. Backup withholding may also apply to the cash payments paid to a non-corporate U.S. holder pursuant to the Merger unless the U.S. holder or other payee provides a taxpayer identification number, certifies that such number is correct and otherwise complies with the backup withholding rules. You should read “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 107 for a more detailed discussion of the U.S. federal income tax consequences of the Merger. You should also consult your tax advisor for a complete analysis of the effect of the Merger on your federal, state and local and/or foreign taxes. If you are not a U.S. holder, the Merger will generally not result in tax to you under U.S. federal income tax laws unless you have certain connections to the United States, and the Company encourages you to seek tax advice regarding such matters.

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Regulatory Approvals (Page 109)

Under the terms of the Merger Agreement, the Merger cannot be completed until (i) the waiting period applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”) has expired or been terminated, (ii) the required filings, consents, approvals or other actions under any other required governmental approvals in the following jurisdictions outside of the United States: Brazil, Canada, Colombia, Costa Rica, Germany, Honduras, Mexico, Saudi Arabia, South Africa, Taiwan, Trinidad & Tobago, Tunisia and Uruguay, as well as jurisdictions identified in writing prior to March 31, 2021, solely as a result of either a change in law after the signing of the Merger Agreement or applicable financial metrics of the parties or their affiliates meeting or exceeding filing thresholds under applicable laws for any applicable measurement period ending after the date of the Merger Agreement, shall have been made, obtained or taken, and any applicable approvals and waiting periods thereunder shall have been received and remain in effect (in the case of approvals) or expired or been terminated, and (iii) if the Committee on Foreign Investment in the United States (“CFIUS”) requests prior to closing that the parties submit a joint voluntary notice, CFIUS approval is obtained, see the section entitled “The Merger—Regulatory Approvals” beginning on page 109.

The Company has also agreed to cooperate with Parent and ND Holdings, LLC, a company in which the Company holds a 30% equity interest (“Navistar Defense”) in relation to certain filings with, and use efforts in certain matters relating to, the Defense Counterintelligence and Security Agency of the Department of Defense (“DCSA”). DCSA approval is not a condition to consummation of the Merger.

The required filings to be made in Brazil, Colombia, Costa Rica, Germany, Mexico and Tunisia have been made. The other required filings to be made in the jurisdictions outside of the United States, identified above, have yet to be filed and are in process.

On November 24, 2020, Parent and the Company jointly notified CFIUS in writing that the parties do not intend to file a CFIUS notice in connection with the transactions contemplated by the Merger Agreement.

The consummation of the Merger is not conditioned on any regulatory approvals in the United States or in any other jurisdiction, other than those described above.

The Merger Agreement (Page 112)

Treatment of Common Stock and Equity Plan Awards (Page 113)

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Solicitation of Acquisition Proposals; Board Recommendation Changes (Page 121)

The Merger Agreement provides that the Company is not permitted to, directly or indirectly, initiate, solicit, knowingly facilitate or encourage the submission of any Acquisition Proposal (as defined in the section entitled “The Merger Agreement—Solicitation of Acquisition Proposals; Board Recommendation Changes” beginning on page 121), enter into or participate in any discussions or negotiations with, furnish any information relating to the Company or its subsidiaries or afford access to the business, properties, books or records of the Company and its subsidiaries or otherwise knowingly cooperate, assist or encourage any effort by any third party that is seeking to make, or has made, an Acquisition Proposal. In addition, the Company may not fail to make, withdraw or modify in a manner adverse to Parent the Company Board Recommendation, which we define as the Board’s recommendation that it has (i) determined that the Merger Agreement and the transactions contemplated thereby are fair to and in the best interests of the Company’s stockholders, (ii) approved, adopted and declared advisable the Merger Agreement and the transactions contemplated thereby, (iii) approved and adopted any approvals or waivers necessary to render the stockholder agreement by and between the Company and Parent dated as of September 5, 2016 and the agreement relating to certain provisions of Section 203 of the DGCL by and between the Company and Parent dated as of September 5, 2016 inapplicable to the transactions contemplated by the Merger Agreement and (iv) resolved to recommend approval and adoption of the Merger Agreement by the stockholders of the Company (“Company Board Recommendation”) or recommend an Acquisition Proposal, fail to enforce or grant any waiver or release under any standstill or similar agreement with respect to any class of equity securities of the Company or any of its subsidiaries, approve any transaction under, or any person becoming an “interested stockholder” under, Section 203 of the DGCL or enter into any agreement in principle, letter of intent, term sheet, Merger Agreement, acquisition agreement, option agreement or other similar instrument relating to an Acquisition Proposal.

Notwithstanding these restrictions, under certain circumstances, the Company may, prior to the time the Merger Agreement is adopted by our stockholders, provide information (which may include non-public information pursuant to a confidentiality agreement) with respect to certain unsolicited written Acquisition Proposals, or engage in discussions or negotiations with a person with respect to certain unsolicited written Acquisition Proposals, which the Board reasonably believes could result in a Superior Proposal (as defined in the section entitled “The Merger Agreement—Solicitation of Acquisition Proposals; Board Recommendation Changes” beginning on page 121); provided that all such information provided to such third party is also made available to Parent as promptly as practicable but in any event within 24 hours to the extent such information has not been previously provided to Parent.

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PROXY SUMMARY

Notwithstanding the foregoing, as provided in the Merger Agreement, at any time before the stockholders of the Company adopt the Merger Agreement, the Board may make a change of recommendation or recommend an Acquisition Proposal following receipt of a Superior Proposal that did not result from a material breach of the Merger Agreement or in response to a material event, change, occurrence or effect arising after the Effective Time that was not known by the Board, in each case if and only if the Board determines in good faith, after consultation with its outside legal counsel, that the failure to effect a change of recommendation would reasonably be expected to be inconsistent with the directors’ fiduciary duties under the DGCL.

Conditions to the Merger (Page 127)

The respective obligations of the Company, Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver of certain customary conditions, including the adoption of the Merger Agreement by the Company’s stockholders, receipt of certain regulatory approvals, the absence of any legal prohibitions, the accuracy of the representations and warranties of the parties, compliance by the parties with their respective obligations under the Merger Agreement and the absence of a material adverse effect on the Company. See “The Merger Agreement—Conditions to the Merger” beginning on page 127.

Termination (Page 128)

The Company and Parent may, by mutual written consent, terminate the Merger Agreement and abandon the Merger at any time prior to the Effective Time of the Merger.

The Merger Agreement may also be terminated and the Merger abandoned at any time prior to the Effective Time of the Merger as follows:

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Termination Fee (Page 129)

In certain circumstances, the Company may be required to pay Parent the Termination Fee if the Merger Agreement is terminated. The Termination Fee would be payable in the following circumstances:

In the case of the first bullet above, Company shall pay Parent the Termination Fee within three business days after such termination.

In the case of the second bullet above, the Company must pay Parent the Termination Fee concurrently with such termination of the Merger Agreement.

In the case of the third bullet above, the Company must pay Parent the Termination Fee concurrently with the applicable event described in clause ‎(iii) of the third bullet.

The Termination Fee is a cash amount equal to $125,000,000.

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Expenses (Page 130)

The Company will reimburse Parent and its affiliates within three business days after termination, if the Company’s stockholders’ approval of the transactions contemplated by the Merger Agreement is not obtained at the stockholder meeting, for 100% of Parent and its affiliates’ documented out-of-pocket fees and expenses (including reasonable fees and expenses of Parent’s counsel) up to $25,000,000 actually incurred by Parent and its affiliates in connection with the Merger Agreement (the “Expense Reimbursement”) and the transactions contemplated thereby including the arrangement of, obtaining the commitment to provide or obtaining any financing for such transactions.

Remedies (Page 130)

No termination of the Merger Agreement will relieve any party to the Merger Agreement of any liability or damages incurred or suffered by the other party resulting from willful breach of such party, which we define as an intentional action or omission by a party that causes such party to be in breach of such representation, warranty, agreement or covenant and where such party knew, or reasonably should have known, at the time such intentional action or omission is or would constitute a breach, or would reasonably be expected to result in a breach, of such representation, warranty, agreement or covenant of the Merger Agreement (“willful breach”).

The parties agree that if the Merger Agreement is terminated and a Termination Fee becomes due and payable and is paid by the Company, the Termination Fee will be Parent’s and Merger Sub’s sole and exclusive remedy against the Company with respect to the Merger Agreement, except in the case of willful breach by the Company, provided that Parent will have the right to refund the Termination Fee in its entirety within 15 business days after receipt of the Termination Fee upon written notice to the Company, and if the Company receives a full refund within two business days of such written notice, Parent will be entitled to seek all post-termination remedies available as contemplated by the Merger Agreement. In no event will the Company be required to pay the Termination Fee or Expense Reimbursement on more than one occasion. If the Termination Fee becomes payable to Parent, and an Expense Reimbursement has been paid, the amount of such Expense Reimbursement actually paid by the Company shall be deducted from the total amount of such Termination Fee payable by the Company, so that the Company will not be required to pay any amount in excess of the Termination Fee.

Prior to the termination of the Merger Agreement, the parties are also entitled to an injunction or injunctions to prevent a breach of the Merger Agreement, and to specifically enforce the performance of the terms and provisions of the Merger Agreement. There is no requirement to obtain, furnish or post any bond with or as a condition to obtaining such injunction or injunctions.

Voting Agreements (Page 133)

Concurrently with the execution of the Merger Agreement, certain stockholders affiliated with Carl Icahn and certain stockholders affiliated with MHR Fund Management entered into voting and support agreements with Parent and Merger Sub, in which the Icahn Stockholders (as defined in the section “The Voting Agreements—Summary” beginning on page 133) and the MHR Stockholders (as defined in the section “The Voting Agreements—Summary” beginning on page 133) agreed, on the terms and subject to the conditions set forth in the voting and support agreements, among other things, to vote in favor of the adoption of the Merger Agreement and the transactions contemplated by the Merger Agreement. As of December 17, 2020, the Icahn Stockholders and the MHR Stockholders have the power to vote in the aggregate approximately 33.2% of the voting power of the shares of common stock issued and outstanding.

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SUMMARY OF PROPOSAL 2 – MERGER COMPENSATION PROPOSAL

Your Board of Directors recommends a vote FOR the non-binding, advisory vote on the compensation of the Company’s named executive officers in connection with the Merger.

Golden Parachute Compensation (Page 135)

As required by Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, the Company is required to submit a proposal to the Company’s stockholders for a non-binding advisory vote to approve the Merger-related compensation.

The compensation that the Company’s named executive officers may be entitled to receive from the Company in connection with the Merger is summarized and included under the heading “Proposal 2—Merger Compensation Proposal—Golden Parachute Compensation” beginning on page 135. That summary includes all compensation and benefits that may be paid or become payable to the Company’s named executive officers by the Company in connection with the Merger.

Merger Compensation Proposal (Page 138)

Pursuant to Section 14A of the Exchange Act and Rule 14a-21(c) thereunder, the Company is seeking a non-binding, advisory stockholder approval of the compensation of the Company’s named executive officers that is based on or otherwise relates to the Merger as disclosed above in this section. The proposal gives the Company’s stockholders the opportunity to express their views on the Merger-related compensation of the Company’s named executive officers.

Accordingly, the Company is asking Company stockholders to vote in favor of the adoption of the following resolution, on a non-binding, advisory basis:

“RESOLVED, that the compensation that will or may be paid or become payable to the Company’s named executive officers, in connection with the Merger, and the agreements or understandings pursuant to which such compensation will or may be paid or become payable, in each case as disclosed pursuant to Item 402(t) of Regulation S-K in ‘Proposal 2—Merger Compensation Proposal—Golden Parachute Compensation’ are hereby APPROVED.”

Vote Required and the Company Board Recommendation (Page 138)

The vote on this proposal is a vote separate and apart from the vote to adopt the Merger Agreement. Accordingly, you may vote not to approve this proposal on Merger-related named executive officer compensation and vote to adopt the Merger Agreement and vice versa. Because the vote is advisory in nature, it will not be binding on the Company, regardless of whether the Merger Agreement is adopted. Approval of the non-binding, advisory proposal with respect to the compensation that may be received by the Company’s named executive officers in connection with the Merger is not a condition to completion of the Merger, and failure to approve this advisory matter will have no effect on the vote to adopt the Merger Agreement. Because the Merger-related named executive officer compensation to be paid in connection with the Merger is based on contractual arrangements with the named executive officers, such compensation may be payable, regardless of the outcome of this advisory vote, if the Merger Agreement is adopted (subject only to the contractual conditions applicable thereto).

Approval, by non-binding advisory vote, of the Merger Compensation Proposal requires the affirmative vote of the holders of a majority of the shares of the Company’s common stock that are present virtually or by proxy at the Annual Meeting and entitled to vote on such proposal. Abstentions will have the same effect as a vote “AGAINST” approval of this compensation proposal, and broker non-votes will have no effect on the outcome of the vote.

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PROXY SUMMARY

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE COMPENSATION THAT MAY BE RECEIVED BY THE COMPANY’S NAMED EXECUTIVE OFFICERS IN CONNECTION WITH THE MERGER.

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SUMMARY OF OTHER ITEMS WITH RESPECT TO THE MERGER

Market Price of Common Stock and Dividend Information (Page 222)

The closing price of our common stock on the New York Stock Exchange (the “NYSE”) on November 6, 2020, the last trading day prior to the public announcement of the execution of the Merger Agreement, was $43.37 per share of our common stock. If the Merger is completed, you will be entitled to receive $44.50 in cash, without interest, for each share of the Company’s common stock owned by you, which represents a premium of approximately 84.88% to the closing price of the Company’s common stock as of January 30, 2020, the last trading day prior to the announcement by Parent of its unsolicited offer to acquire the Company for $35.00 per share, and a 58.14% premium to the volume-weighted average price of shares of the Company’s common stock for the 30 trading days ended January 30, 2020, a premium of approximately 24.16% to the closing price of the Company’s common stock as of September 9, 2020, the last trading day prior to the Company’s confirmation of a revised proposal from Parent to acquire the Company for $43.00 per share and a premium of approximately 2.6% to the closing price of the Company’s common stock as of November 6, 2020, the last trading day prior to the public announcement of the execution of the Merger Agreement.

On [●], 2021, the most recent practicable date before this proxy statement was mailed to our stockholders, the closing price for our common stock on the NYSE was $[●] per share of common stock. You are encouraged to obtain current market quotations for our common stock in connection with voting your shares of common stock.

The Company has not paid any dividends on its common stock or Series D Stock since 1980. The Series D Stock ranks senior to common stock as to dividends and receives dividends at a rate of 120% of the cash dividends on common stock, as declared on an as-converted basis. Our sole share of Series B Stock is not entitled to receive dividends. Certain debt instruments of the Company include limitations on the issuance of dividends. Additionally, under the terms of the Merger Agreement, the Company cannot declare, set aside or pay any dividend or make any other distribution in respect of our capital stock or other equity interests, without Parent’s written consent, prior to the termination of the Merger Agreement or the consummation of the Merger.

Appraisal Rights (Page 241)

If the Merger is completed, the Company’s stockholders who do not vote in favor of the adoption of the Merger Agreement are entitled to appraisal rights under Section 262 of the DGCL, but only if they fully comply with all of the applicable legal requirements of Section 262 of the DGCL, which are summarized in this proxy statement in the section entitled “Appraisal Rights” beginning on page 241 and set forth in their entirety in Section 262 of the DGCL (attached to this proxy statement as Annex D). This means that you may be entitled to have the fair value of your shares of our common stock determined by the Delaware Court of Chancery and to receive payment based on that valuation in lieu of the per share Merger Consideration if you follow exactly the procedures set forth in Section 262 of the DGCL. The ultimate amount you may receive in an appraisal proceeding may be less than, equal to or more than the amount you would have received under the Merger Agreement.

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PROXY SUMMARY

To exercise your appraisal rights, you must, among other things, submit a written demand for appraisal to the Company before the vote is taken on the adoption of the Merger Agreement (and must not fail to perfect or effectively withdraw your demand or otherwise waive or lose your right to appraisal) and you must not vote (either virtually or by proxy) in favor of the adoption of the Merger Agreement. If you fail to follow exactly the procedures set forth in Section 262 of the DGCL, you will lose your appraisal rights. The requirements for exercising appraisal rights are further described in the section entitled “Appraisal Rights” beginning on page 241 and the text of the DGCL appraisal rights statute reproduced in its entirety as Annex D to this proxy statement. We encourage you to read these provisions carefully and in their entirety. If you hold your shares of our common stock through a bank, brokerage firm or other nominee and you wish to exercise your appraisal rights, you should consult with your bank, brokerage firm or other nominee to determine the appropriate procedures for the making of a demand for appraisal by your bank, brokerage firm or other nominee. In view of the complexity of the DGCL relating to appraisal rights, stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors promptly. The discussion of appraisal rights in this proxy statement is not a full summary of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262 of the DGCL, a copy of which is attached to this proxy statement as Annex D.

Delisting and Deregistration of Common Stock (Page 246)

If the Merger is completed, our common stock will be delisted from the NYSE and deregistered under the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder (the “Exchange Act”), and we will no longer file periodic reports with the Securities and Exchange Commission (the “SEC”) on account of our common stock.

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SUMMARY OF PROPOSAL 3 – ELECTION OF DIRECTORS

Election of Directors (Page 139)

Your Board of Directors recommends a vote FOR each of the Director nominees.

Director Nominees

Our Board recommends that you vote “for” all of the director nominees listed below. Set forth below is summary information about each director nominee, with more detailed information about the qualifications and experience of each director nominee contained under Proposal 3 - Election of Directors beginning on page 139 of this proxy statement.

				Current Committee Membership
	Nominee and Principal Occupation	Age	Director Since	A	C	F	NG
	Troy A. Clarke Executive Chairman and Chairman of the Board of Navistar	65	April 2013
	José María Alapont Former Chairman, President and Chief Executive Officer of Federal-Mogul Corporation	70	October 2016
	Stephen R. D’Arcy Partner, Quantum Group LLC	66	October 2016
	Vincent J. Intrieri Founder, President and Chief Executive Officer, VDA Capital Management LLC	64	October 2012
	Mark H. Rachesky, M.D. Founder and President, MHR Fund Management LLC	61	October 2012
	Christian Schulz Chief Financial Officer, TRATON SE	43	August 2018
	Kevin M. Sheehan Former President and Chief Executive Officer, Scientific Games	67	October 2018
	Dennis A. Suskind Retired General Partner, Goldman Sachs & Company	78	October 2016
	Janet T. Yeung Principal and General Counsel, MHR Fund Management LLC	56	December 2020

A  Audit

C  Compensation

F  Finance

NG Nominating & Governance

Chair

Co-Chair

Member

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PROXY SUMMARY 

Business Strategy

Corporate Governance Highlights

Nine of our ten directors are independent under our corporate governance guidelines and the NYSE listing standards.
All of the members of our Audit Committee, Compensation Committee, Finance Committee and the Nominating and Governance Committee are independent and financially literate.		We have Co-Independent Lead Directors.

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Stockholder Engagement

The Company has a robust stockholder outreach and engagement program. We engage in regular contact with our stockholders throughout the year. As of December 17, 2020, approximately 57.0% of our stock is held by four of our stockholders. Three of these stockholders have representation on our Board as discussed in Proposal 3—Election of Directors. These stockholders, through their representation on our Board, and two of whom also have representation on our Compensation Committee, are integrally involved in our compensation decisions and policies. We also engage in regular dialogue with our two remaining largest stockholders without representation on our Board. We maintain open lines of communication with corporate governance advisory institutions and with all of our stockholders in order to inform them of Company updates and solicit their feedback. We continuously work to improve our stockholder engagement efforts and place importance on the feedback provided to us during this process.

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SUMMARY OF PROPOSAL 4 – SAY-ON-PAY

Say-On-Pay (Page 167)

Your Board of Directors recommends a vote FOR the approval of named executive officer compensation.

Our Compensation Program

The overall objective of our executive compensation program is to maintain a close link between pay and performance, both long-term and short-term. We believe that the compensation of our executives should be closely tied to the performance and growth of the Company, so their interests are aligned with the long-term interests of our stockholders.

Executive Compensation Highlights

We continue to focus on, and are aware of, investor concerns regarding the link between pay and performance. In 2019, the results against our annual incentive metrics resulted in our awards being paid at 134.7% of target. For the 2020 annual incentive plan, Navistar was below threshold for three performance metrics, slightly above target for one metric and at threshold for one metric, which will yield an overall payout percentage of 5.5% of target.

For a summary of our commitment to best practices in executive compensation and changes made in 2020, please see the Executive Overview section of the section entitled “Say-On-Pay—Compensation Discussion & Analysis” beginning on page 168 of this proxy statement.

Key Executive Compensation Decisions

Consistent with pay-for-performance principles, base salary performance increases are based upon named executive officer (“NEO”) and Company performance. As a result of the COVID-19 pandemic and economic environment, the Company did not provide base salary performance increases in 2020. In addition, the Company instituted a Non-elective Deferred Compensation Plan for all U.S.-based, salaried exempt, non-represented employees, including all NEOs. NEOs had a percentage of pay temporarily deferred beginning April 20, 2020 and ending August 31, 2020. The deferral was repaid in November of 2020 with 6% annual interest.

The CEO makes base salary recommendations for the NEOs and Section 16 Officers to the Compensation Committee. The CEO does not participate in decisions regarding his own compensation. The Compensation Committee reviews the salary for the CEO and reviews, approves and/or adjusts the CEO’s base salary recommendations for the other NEOs and Section 16 Officers included in the CEO’s recommendation. The Compensation Committee then recommends, and the independent members of the Board approve or adjust, the salary recommendation for the CEO.

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PROXY SUMMARY 

Executive Compensation Best Practices

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PROXY SUMMARY 

SUMMARY OF PROPOSAL 5 – RATIFICATION OF INDEPENDENT ACCOUNTING FIRM

Ratification of Independent Accounting Firm (Page 218)

Your Board of Directors recommends a vote FOR the ratification of the appointment of KPMG LLP (“KPMG”) as Navistar’s independent registered public accounting firm for 2021.

The Board is asking our stockholders to ratify the Audit Committee’s appointment of KPMG as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2021. KPMG has been the Company’s auditors since 2006. For additional information regarding the Company’s relationship with KPMG, please refer to the Report of the Audit Committee and the Fees of Independent Registered Public Accounting Firm contained below.

If the appointment of KPMG as our independent registered public accounting firm for 2021 is not ratified by our stockholders, the adverse vote will be considered a direction to the Audit Committee to consider other auditors for next year. However, because of the difficulty in making any substitution of auditors after the beginning of the current year, the appointment for 2021 will stand, unless the Audit Committee finds other good reason for making a change.

Representatives of KPMG will be present at the virtual Annual Meeting and will have the opportunity to make a statement if they desire to do so. The representatives will also be available to respond to virtual questions at the Annual Meeting.

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PROXY SUMMARY

SUMMARY OF PROPOSAL 6 – ADJOURNMENT

Adjournment (Page 221)

Your Board of Directors recommends a vote FOR the proposal to enable the adjournment or postponement of the Annual Meeting, if necessary, to continue to solicit votes for the Merger Proposal.

The vote on the Adjournment Proposal relates to the Merger Proposal and, if adopted, will allow the Company, if necessary or appropriate, to adjourn the Annual Meeting in order to solicit additional proxies, including if there are not sufficient votes to approve the Merger Proposal in accordance with the requisite stockholder vote.

Notwithstanding the inclusion or approval of the Adjournment Proposal, whether or not a quorum is present at the Annual Meeting, the chair of the Annual Meeting may adjourn or postpone the Annual Meeting to another place, if applicable, date or time, in accordance with the Company’s Amended and Restated By-Laws (the “By-Laws”), effective as of October 6, 2020.

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QUESTIONS AND ANSWERS

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND THE MERGER

The following questions and answers are intended to briefly address some commonly asked questions regarding the Merger, the Merger Agreement, and the Annual Meeting. These questions and answers may not address all questions that may be important to you as a Company stockholder. Please refer to the “Summary” beginning on page 133 and the more detailed information contained elsewhere in this proxy statement, the Annexes to this proxy statement and the documents referred to in this proxy statement, which you should read carefully and in their entirety.

Questions About the Annual Meeting

You may log in to the Annual Meeting online by visiting www.virtualshareholdermeeting.com/NAV2021 on your smart phone, tablet or computer. The latest versions of Chrome, Safari, Edge, Firefox or Internet Explorer 11 are required. For example, some operating systems may experience difficulty accessing the Annual Meeting using Internet Explorer. We recommend that you log in at least 15 minutes before the Annual Meeting starts to ensure your browser is compatible. To enter the meeting, you will need your assigned 16-digit control number. The 16-digit control number will be included in the Notice of Internet Availability of Proxy Materials (the “Notice”), on your proxy card, voting instruction form or other applicable proxy notices. If you hold your shares in “street name” through a bank, brokerage firm or other nominee, your assigned 16-digit control number should be included with the voting instructions received from your bank, brokerage firm, or other nominee. Instructions on how to attend and participate in the virtual Annual Meeting will also be available at www.virtualshareholdermeeting.com/NAV2021.

Even if you plan to virtually attend the Annual Meeting we recommend that you also vote by Internet, QR Code, telephone or sign and date the proxy card or voting instruction card and return it promptly to ensure that your vote will be counted if you later decide not to, or are unable to, attend the Annual Meeting.

If you participate in the virtual Annual Meeting, it is important that you remain connected to the Internet during the meeting in order to participate and vote. It is your responsibility to ensure connectivity for the duration of the Annual Meeting. You should allow ample time to check into the virtual Annual Meeting online and complete the related login procedures.

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QUESTIONS AND ANSWERS

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QUESTIONS AND ANSWERS

If your shares of our common stock are held by a bank, brokerage firm, or other nominee, you are considered the beneficial owner of shares held in “street name,” and your bank, brokerage firm, or other nominee, or their intermediary, is considered the stockholder of record with respect to those shares. Your bank, brokerage firm, or other nominee should send you, as the beneficial owner, a package describing the procedure for voting your shares of our common stock. You should follow the instructions provided by them to vote your shares of our common stock.

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QUESTIONS AND ANSWERS

Beneficial Owner. If you are a beneficial owner, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you. To attend the Annual Meeting virtually (regardless of whether you intend to vote your shares virtually at the Annual Meeting), you must have your assigned 16-digit control number, which will grant you access to the virtual Annual Meeting. For more information, see the instructions under “The Annual Meeting—Attendance” beginning on page 44 of this proxy statement.

Voting at the Meeting. To vote during the virtual Annual Meeting, stockholders can log in to the meeting website at www.virtualshareholdermeeting.com/NAV2021 and follow the instructions provided on the website. There will be a vote button that, when clicked, will display the resolutions and voting choices. You will be able to vote by selecting your voting direction from the options shown on the screen. Confirmation that your vote has been received should appear once submitted. While voting remains open during the virtual Annual Meeting, you will be able to change your vote by selecting another voting direction or cancel your vote by pressing the cancel button before the Annual Meeting concludes. We encourage you to vote your proxy by Internet, QR Code, telephone or mail prior to the Annual Meeting, even if you plan to attend the virtual Annual Meeting.

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QUESTIONS AND ANSWERS

IT IS IMPORTANT THAT YOU PROMPTLY VOTE YOUR SHARES OF OUR COMMON STOCK. WHETHER OR NOT YOU PLAN TO ATTEND THE VIRTUAL ANNUAL MEETING. IF YOU ARE A STOCKHOLDER OF RECORD, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE ACCOMPANYING PREPAID REPLY ENVELOPE, OR SUBMIT YOUR PROXY BY TELEPHONE, BY SCANNING YOUR QR CODE OR VIA THE INTERNET. STOCKHOLDERS WHO ATTEND THE VIRTUAL ANNUAL MEETING MAY REVOKE THEIR PROXIES BY VOTING VIRTUALLY AT THE MEETING. IF YOU ARE A BENEFICIAL OWNER OF OUR COMMON STOCK AND YOUR SHARES ARE HELD IN STREET NAME, YOU SHOULD INSTRUCT YOUR BANK, BROKERAGE FIRM OR OTHER NOMINEE ON HOW TO VOTE YOUR SHARES OF OUR COMMON STOCK USING THE INSTRUCTIONS PROVIDED BY YOUR BANK, BROKERAGE FIRM OR OTHER NOMINEE. IF YOU FAIL TO SUBMIT A PROXY OR TO VOTE VIRTUALLY AT THE ANNUAL MEETING, OR DO NOT PROVIDE YOUR BANK, BROKERAGE FIRM OR OTHER NOMINEE WITH INSTRUCTIONS, AS APPLICABLE, YOUR SHARES OF OUR COMMON STOCK WILL NOT BE VOTED ON THE MERGER PROPOSAL, WHICH WILL HAVE THE SAME EFFECT AS A VOTE “AGAINST” APPROVAL OF THE MERGER PROPOSAL. WITH RESPECT TO THE MERGER COMPENSATION PROPOSAL, THE ELECTION OF DIRECTORS PROPOSAL, THE SAY-ON-PAY PROPOSAL AND THE ADJOURNMENT PROPOSAL, IF YOU FAIL TO SUBMIT A PROXY OR TO VOTE VIRTUALLY AT THE ANNUAL MEETING, OR DO NOT PROVIDE YOUR BANK, BROKERAGE FIRM OR OTHER NOMINEE WITH INSTRUCTIONS, AS APPLICABLE, YOUR SHARES OF OUR COMMON STOCK WILL NOT HAVE AN EFFECT ON THE RESPECTIVE PROPOSAL.

For holders in street name: You may change or revoke your voting instructions by following the specific directions provided to you by your bank, brokerage firm or other nominee.

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QUESTIONS AND ANSWERS

For holders in street name: If your shares are held in street name, under certain circumstances, your shares may be voted even if you do not provide the bank or brokerage firm with voting instructions. Under NYSE rules, your broker may vote shares held in street name on certain “routine” matters without your instruction. NYSE rules consider the Ratification of Independent Accounting Firm Proposal (Proposal 5) to be a routine matter. As a result, your broker is permitted to vote your shares on that matter at its discretion without instruction from you. However, banks, brokerage firms and other nominees are precluded from exercising their voting discretion with respect to approving non-routine matters, such as the Merger Proposal (Proposal 1), the Merger Compensation Proposal (Proposal 2), the Election of Directors Proposal (Proposal 3), the Say-On-Pay Proposal (Proposal 4) and the Adjournment Proposal (Proposal 6) and, as a result, absent specific instructions from the beneficial owner of such shares of our common stock, banks, brokerage firms or other nominees are not empowered to vote those shares of our common stock on those non-routine matters. If you do not instruct your bank, brokerage firm or other nominee to vote your shares of our common stock, your shares of our common stock will not be voted, and the effect will be the same as a vote “AGAINST” approval of the Merger Proposal, and your shares of our common stock will not be voted and will not have an effect on Merger Compensation Proposal, the Election of Directors Proposal, the Say-On-Pay Proposal and the Adjournment Proposal. The missing votes for these non-routine matters are called “broker non-votes.”

If you own shares that are registered in your own name and return a signed proxy card or grant a proxy via the Internet, scanning your QR Code or by telephone, but do not indicate how you wish your shares to be voted, the shares represented by your properly signed proxy will be voted “FOR” approval of the Merger Proposal, the Merger Compensation Proposal, the Election of Directors Proposal, the Say-On-Pay Proposal, the Ratification of Independent Accounting Firm Proposal and the Adjournment Proposal.

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QUESTIONS AND ANSWERS

With respect to Proposals 1, 2, 4, 5 and 6, you may vote FOR, AGAINST or ABSTAIN. With respect to Proposals 1, 2, 4, 5 and 6, if you abstain from voting on any of these proposals, the abstention will have the same effect as an “AGAINST” vote. With respect to Proposal 3, you may vote “FOR” all nominees, “WITHHOLD” your vote as to all nominees, or “FOR” all nominees except those specific nominees from whom you “WITHHOLD” your vote. A properly executed proxy card marked “WITHHOLD” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated. Proxies may not be voted for more than nine directors and stockholders may not cumulate votes in the election of directors. If you abstain from voting on Proposal 3, the abstention will not have an effect on the outcome of the vote. With respect to Proposal 1, broker non-votes will have the same effect as an “AGAINST” vote. With respect to Proposals 2, 3, 4, 5 and 6, broker non-votes will not have an effect on the outcome of the vote.

Votes submitted by mail, telephone, QR Code or Internet will be voted by the individuals named on the proxy and/or voting instruction card (or the individual properly authorized) in the manner indicated. If you do not specify how you want your shares voted, they will be voted in accordance with our Board’s recommendations. If you hold shares in more than one account, you must vote each proxy and/or voting instruction card you receive to ensure that all shares you own are voted.

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QUESTIONS AND ANSWERS

If you hold shares in more than one account, you must vote each proxy and/or voting instruction card you receive separately to ensure that all shares you own are voted. If you receive more than one proxy and/or voting instruction card for accounts that you believe could be combined because the stockholder is the same, contact our Transfer Agent (for shares held by registered stockholders) or your broker (for shares held in street name) to request that the accounts be combined for future mailings.

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QUESTIONS AND ANSWERS

In addition, the Company’s By-Laws require that the Company be given advance written notice of nominations for election to the Board and other matters that stockholders wish to present for action at an annual meeting of stockholders (other than matters included in the Company’s proxy materials in accordance with Rule 14a-8 under the Exchange Act). For matters to be presented at the 2022 Annual Meeting, the Company’s Corporate Secretary must receive such notice no earlier than [●], 2021, and no later than [●], 2021.

The notice must contain, and be accompanied by, certain information as specified in the By-Laws. The Company recommends that any stockholder wishing to nominate a director at, or bring any other item before, an annual meeting of stockholders review the By-Laws, which are available on the Company’s website at https://ir.navistar.com/governance/board-of-directors/default.aspx#governance. All stockholder proposals and director nominations must be delivered to Navistar by mail c/o the Corporate Secretary at 2701 Navistar Drive, Lisle, Illinois 60532.

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QUESTIONS AND ANSWERS

We intend to answer properly submitted questions that are pertinent to the Annual Meeting matters, as time permits. Questions sent will be moderated before being sent to the Chairman of the Annual Meeting. The Company reserves the right to edit profanity or other inappropriate language, or to exclude questions that are not pertinent to Annual Meeting matters or that are otherwise inappropriate.

If you hold your shares of our common stock in your own name as the stockholder of record, you may submit a proxy to have your shares of our common stock voted at the Annual Meeting in one of three ways: (i) using the Internet or scanning your QR Code in accordance with the instructions set forth on the enclosed proxy card; (ii) calling the toll-free number specified on your proxy card; or (iii) completing, signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope. If you decide to attend the virtual Annual Meeting and vote virtually, your vote by ballot will revoke any proxy previously submitted.

If you are a beneficial owner, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you.

Questions About the Merger

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QUESTIONS AND ANSWERS

Additionally, if the Merger is not completed, the Merger Agreement will be terminated. Depending on the circumstances surrounding the termination, it is possible that the Company will be required to pay Parent a Termination Fee of $125,000,000. It is also possible that the Company may be required to pay Parent and its affiliates 100% of their documented out-of-pocket fees and expenses actually incurred in connection with the Merger Agreement, in an amount up to $25,000,000, which amount shall be deducted from any Termination Fee required to be paid. In no event shall the Company be required to pay more than $125,000,000 in Termination Fees and reimbursement of expenses to Parent.

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QUESTIONS AND ANSWERS

Because the affirmative vote required to approve the Merger Proposal is based upon the total number of outstanding shares of our common stock entitled to vote, if you fail to submit a proxy or vote virtually at the Annual Meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will have the same effect as a vote “AGAINST” approval of the Merger Proposal. If your shares of our common stock are held in “street name” by your bank, brokerage firm or other nominee and you do not instruct the nominee how to vote your shares, the failure to instruct your nominee will have the same effect as a vote “AGAINST” the Merger Proposal.

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QUESTIONS AND ANSWERS

Concurrently with the execution of the Merger Agreement, the Icahn Stockholders and the MHR Stockholders (each as defined in the section “The Voting Agreements—Summary” beginning on page 133) entered into Voting Agreements (as defined in the section “The Voting Agreements—Summary” beginning on page 133) with Parent and Merger Sub. The Voting Agreements require the Icahn Stockholders and the MHR Stockholders and their affiliates, who collectively hold approximately 33.2% of the outstanding voting power of our common stock as of December 17, 2020, to vote approximately 92.4% of their collective shares of our common stock in favor of the adoption of the Merger Agreement. Additionally, as of December 17, 2020, Parent and its affiliates collectively own approximately 16.7% of the outstanding shares of the Company’s common stock which, pursuant to the Merger Agreement, Parent has committed to vote in favor of the adoption of the Merger Agreement and the transactions contemplated by the Merger Agreement.

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QUESTIONS AND ANSWERS

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FORWARD LOOKING STATEMENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement and the other documents referenced herein, including, without limitation, statements relating to the Merger, may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, each as amended. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the consummation of the Merger and the anticipated benefits thereof. Forward-looking statements provide current expectations of future events and include any statement that does not directly relate to any historical or current fact. Words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “projects,” or other similar expressions may identify such forward-looking statements.

These and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those discussed in forward-looking statements, including, as a result of factors, risks and uncertainties over which we have no control. The inclusion of such statements should not be regarded as a representation that any plans, estimates or expectations will be achieved. You should not place undue reliance on such statements. Important factors, risks and uncertainties that could cause actual results to differ materially from such plans, estimates or expectations include, but are not limited to, the following: (i) conditions to the completion of the Merger, including stockholder approval of the Merger Proposal, may not be satisfied or the regulatory approvals required for the Merger may not be obtained, in each case, on the terms expected or on the anticipated schedule; (ii) the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement between the parties to the Merger or affect the ability of the parties to recognize the benefits of the Merger; (iii) the effect of the announcement or pendency of the Merger on the Company’s business relationships, operating results and business generally; (iv) risks that the Merger disrupts the Company’s current plans and operations and potential difficulties in the Company’s employee retention as a result of the Merger; (v) risks related to diverting management’s attention from the Company’s ongoing business operations; (vi) potential litigation that may be instituted against the Company or its directors or officers related to the Merger or the Merger Agreement between the parties to the Merger and any adverse outcome of any such potential litigation; (vii) the amount of the costs, fees, expenses and other charges related to the Merger, including in the event of any unexpected delays; (viii) any adverse effects on the Company by other general industry, economic, business and/or competitive factors; (ix) other risks to consummation of the Merger, including the risk that the Merger will not be consummated within the expected time period, or at all, which may affect the Company’s business and the price of the Company’s common stock; and (x) such other factors as are set forth in the Company’s periodic public filings with the SEC, including, but not limited to, those described under the headings “Risk Factors” and “Forward Looking Statements” in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2020 and in its other filings made with the SEC from time to time, which are available via the SEC’s website at www.sec.gov. The consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on the Company’s financial condition, results of operations, credit rating or liquidity.

Forward-looking statements reflect the views and assumptions of management as of the date of this communication with respect to future events. The Company does not undertake, and hereby disclaims, any obligation, unless required to do so by applicable securities laws, to update any forward-looking statements as a result of new information, future events or other factors. The inclusion of any statement in this communication does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

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THE ANNUAL MEETING

THE ANNUAL MEETING

Date, Time and Place of the Annual Meeting

This proxy statement is being furnished to our stockholders as part of the solicitation of proxies by the Board for use at the Annual Meeting to be held virtually on [●], 2021 at [●] [a.m.], Central Time, or at any adjournment or postponement thereof.

Purpose of the Annual Meeting

At the Annual Meeting, holders of our common stock will be asked to consider and vote on the following:

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE ABOVE PROPOSALS.

The Company’s stockholders must approve the Merger Proposal in order for the Merger to occur. If the Company’s stockholders fail to approve the Merger Proposal, the Merger will not occur. A copy of the Merger Agreement is attached as Annex A to this proxy statement, which we encourage you to read carefully and in its entirety.

The vote on the Merger Compensation Proposal is a vote separate and apart from the vote on the Merger Proposal. Accordingly, a stockholder may vote to approve the Merger Proposal and vote not to adopt the Merger Compensation Proposal, and vice versa. Because the vote on the Merger Compensation Proposal is advisory in nature only, it will not be binding on the Company, Parent or the surviving corporation in the Merger. Accordingly, if the Merger Agreement is adopted by the Company’s stockholders and the Merger is completed, the Merger-related compensation may be paid to the Company’s named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements even if the stockholders do not approve the Merger Compensation Proposal.

Record Date and Quorum

The Board has fixed the close of business on [●], 2021 as the record date for the determination of stockholders entitled to receive notice of, and to vote virtually at, the Annual Meeting, and any adjournments or postponements thereof. Only holders of record of our common stock as of the close of business on the record date are entitled to receive notice of, and to vote (virtually or by proxy) at, the Annual Meeting and at any adjournment or postponement thereof.

As of the close of business on the record date, there were [●] shares of common stock outstanding. Each holder of our common stock is entitled to cast one vote per such share on each matter properly brought before the Annual Meeting for each share of our common stock that such holder owned as of the record date.

Under the By-Laws, the presence at the Annual Meeting, virtually or represented by proxy, of the holders of one-third of the shares of our common stock issued and outstanding as of the close of business on the record date constitutes a quorum for the transaction of business at the Annual Meeting. Once a share is represented at the Annual Meeting, it will be counted for the purpose of determining a quorum at the Annual Meeting. Shares of our common stock represented at the Annual Meeting but not voted, including shares of our common stock for which proxies have been received but for which stockholders have abstained, will be treated as present at the Annual Meeting for purposes of determining the presence or absence of a quorum for the transaction of all business. Broker non-votes will be treated as present at the Annual Meeting for purposes of determining the presence or absence of a quorum. Your vote is very important, regardless of the number of shares of our common stock you own. Because stockholders cannot take any action at the Annual Meeting unless one-third of the shares of our common stock issued and outstanding and entitled to vote is represented, it is important that you attend the Annual Meeting virtually or are represented by proxy at the Annual Meeting.

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THE ANNUAL MEETING

In the event that a quorum is not present at the Annual Meeting, we expect to adjourn or postpone the Annual Meeting until we solicit enough proxies to obtain a quorum. The Company may also adjourn or postpone the Annual Meeting (i) to the extent necessary to ensure that the stockholders are given sufficient time to evaluate any necessary supplement or amendment to the proxy statement in advance of the Annual Meeting, and (ii) if required by applicable law, a governmental authority or a request from the SEC.

Attendance

Only stockholders who owned shares as of the record date, or their duly appointed proxies, and our guests may virtually attend the Annual Meeting. To enter the meeting, you will need your assigned 16-digit control number. The 16-digit control number will be included in the Notice, or on your proxy card, voting instruction form or other applicable proxy notices. If you hold your shares in “street name” through a bank, brokerage firm or other nominee, your assigned 16-digit control number should be included with your voting instructions received from your bank, brokerage firm or other nominee. If your bank, brokerage firm or other nominee has not provided you with your assigned 16-digit control number, please contact them for instructions on how to attend the virtual Annual Meeting.

Vote Required

Approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the shares of our common stock outstanding as of the close of business on the record date. For the Merger Proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” Abstentions will not be counted as votes cast in favor of the Merger Proposal, but will count for the purpose of determining whether a quorum is present. Your vote is very important, regardless of the number of shares of our common stock you own. Because stockholders cannot take any action at the Annual Meeting unless the holders of a majority of the shares of our common stock issued and outstanding and entitled to vote thereat is represented, it is important that you attend the Annual Meeting virtually or are represented by proxy at the Annual Meeting. If you fail to return your proxy card, submit your proxy by telephone, QR Code or the Internet or vote virtually at the Annual Meeting, or if your shares are held in “street name” by your bank, brokerage firm or other nominee and you fail to instruct your bank, brokerage firm or other nominee to vote your shares of common stock, your shares will have the same effect as a vote “AGAINST” approval of the Merger Proposal.

If your shares of our common stock are registered directly in your name with our Transfer Agent, you are considered, with respect to those shares of our common stock, the stockholder of record. This proxy statement and proxy card have been sent directly to you by the Company. As the stockholder of record, you have the right to vote virtually at the Annual Meeting or to grant your voting rights directly to the Company or to a third party by a proxy duly executed or transmitted in a manner in accordance with applicable law.

If your shares of our common stock are held in “street name” through a bank, brokerage firm or other nominee, you are considered the beneficial owner of those shares. In that case, this proxy statement has been forwarded to you by your bank, brokerage firm or other nominee who is considered, with respect to those shares of our common stock, the stockholder of record. As the beneficial owner, you have the right to direct your bank, brokerage firm or other nominee how to vote your shares by following their instructions for voting. Your bank, brokerage firm or other nominee should send you, as the beneficial owner, a package describing the procedure for voting your shares.

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THE ANNUAL MEETING

Banks, brokerage firms or other nominees who hold shares in “street name” for customers generally have the authority to vote on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokerage firms and other nominees are precluded from exercising their voting discretion with respect to approving non-routine matters, such as the Merger Proposal, the Merger Compensation Proposal, the Election of Directors Proposal, the Say-On-Pay Proposal and the Adjournment Proposal, and, as a result, absent specific instructions from the beneficial owner of such shares of our common stock, banks, brokerage firms or other nominees are not empowered to vote those shares of our common stock on those non-routine matters.

For the purposes of the Merger Proposal, if you virtually attend the Annual Meeting and abstain on the Merger Proposal, or if you have given a proxy and have abstained on this Merger Proposal, this will have the same effect as if you voted “AGAINST” approval of the Merger Proposal. If you do not instruct your bank, brokerage firm or other nominee to vote your shares of our common stock, your shares of our common stock will not be voted, and as broker non-votes, the effect will be the same as a vote “AGAINST” approval of the Merger Proposal.

Approval of the Merger Compensation Proposal requires the affirmative vote of the holders of a majority of the shares of our common stock that are present virtually or by proxy at the Annual Meeting and entitled to vote on such proposal. The Merger Compensation Proposal is an advisory vote and the results will not be binding on the Board or the Company. For this proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” For purposes of the Merger Compensation Proposal, if you virtually attend the Annual Meeting and abstain on the Merger Compensation Proposal, or if you have given a proxy and abstained on the Merger Compensation Proposal, your shares will not be voted “FOR” or “AGAINST” such proposal, but will have the same effect as a vote “AGAINST” such proposal. If you fail to submit a proxy or vote virtually at the Annual Meeting or if your shares of our common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee to vote your shares of our common stock, your shares of our common stock will not be voted, but this will not have an effect on the proposal to approve the Merger Compensation Proposal.

Approval of each of the director nominees in the Election of Directors Proposal requires the affirmative vote of a plurality of the shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on each director nominee in the Election of Directors Proposal. With respect to the Election of Directors Proposal, you may vote “FOR” all nominees, “WITHHOLD” your vote as to all nominees, or “FOR” all nominees except those specific nominees from whom you “WITHHOLD” your vote. A properly executed proxy card marked “WITHHOLD” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated. Proxies may not be voted for more than nine directors and stockholders may not cumulate votes in the election of directors. Abstentions and broker non-votes will not have an effect on this Election of Directors Proposal.

Approval of the Say-On-Pay Proposal requires the affirmative vote of the holders of a majority of the shares of our common stock that are present virtually or represented by proxy at the Annual Meeting and entitled to vote on such proposal. The Say-On-Pay Proposal is an advisory vote and the results will not be binding on the Board or the Company. With respect to the Say-On-Pay Proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” If you abstain from voting on the Say-On-Pay Proposal, the abstention will have the same effect as an “AGAINST” vote. Broker non-votes will not have an effect on this Say-on-Pay Proposal.

Approval of the Ratification of Independent Accounting Firm Proposal requires the affirmative vote of the holders of a majority of the shares of our common stock present virtually or represented by proxy at the Annual Meeting and entitled to vote on the Ratification of Independent Accounting Firm Proposal. With respect to the Ratification of Independent Accounting Firm Proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” If you abstain from voting on the Ratification of Independent Accounting Firm Proposal, the abstention will have the same effect as an “AGAINST” vote. Broker non-votes will not have an effect on this proposal.

Approval of the Adjournment Proposal requires the affirmative vote of the holders of a majority of the shares of our common stock present virtually or represented by proxy at the Annual Meeting and entitled to vote on the Adjournment Proposal. With respect to the Adjournment Proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” If you abstain from voting on the Adjournment Proposal, the abstention will have the same effect as an “AGAINST” vote. Broker non-votes will not have an effect on this proposal.

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THE ANNUAL MEETING

Proxies and Revocation

Any stockholder of record entitled to vote at the Annual Meeting may submit a proxy via the Internet, by scanning your QR Code, by telephone or by returning the enclosed proxy card in the accompanying postage-paid reply envelope, or may vote by attending the Annual Meeting virtually. If you are a stockholder of record, you will need your assigned 16-digit control number to vote your shares virtually at the Annual Meeting. The control number can be found on the Notice, your proxy card, voting instruction form, or other applicable proxy notices. If your shares of our common stock are held in “street name” through a bank, brokerage firm or other nominee, you should instruct your bank, brokerage firm or other nominee on how to vote your shares of our common stock using the instructions provided by your bank, brokerage firm or other nominee. If you are a beneficial owner and wish to vote virtually at the Annual Meeting, your assigned 16-digit control number should be included with your voting instructions received from the bank, brokerage firm or other nominee. If your bank, brokerage firm or other nominee has not provided you with a 16-digit control number, please contact them for instructions on how to attend the virtual Annual Meeting and vote your shares. If you fail to vote virtually at the Annual Meeting or fail to return your proxy card or fail to submit your proxy via the Internet, scanning your QR Code or by telephone, your shares of common stock will NOT be counted for purposes of determining whether a quorum is present at the Annual Meeting and will have the same effect as a vote “AGAINST” the Merger Proposal. If your shares are held in “street name” by your bank, brokerage firm or other nominee and you fail to instruct your bank, brokerage firm or other nominee to vote, your shares of our common stock will be counted for purposes of determining whether a quorum is present at the Annual Meeting and will have the same effect as a vote “AGAINST” approval of the Merger Proposal. If you fail to vote virtually at the Annual Meeting or fail to return your proxy card or fail to submit your proxy by telephone, scanning your QR Code or the Internet, your shares of our common stock will not have an effect on the Merger Compensation Proposal, the Election of Directors Proposal, the Say-On-Pay Proposal and the Adjournment Proposal.

You have the right to revoke a proxy. If your shares are registered directly in your name, you may revoke your proxy or change your vote before the Annual Meeting. To do so, you must do one of the following:

If you hold shares in “street name” through a bank, brokerage firm or other nominee, you may submit a new, later-dated voting instruction form or contact your bank, brokerage firm or other nominee for specific directions to revoke your voting instructions. You may also vote virtually at the Annual Meeting if you obtain a legal proxy.

Adjournments and Postponements

Although it is not currently expected, the Annual Meeting may be adjourned or postponed. The Company retains full authority, to the extent set forth in its By-Laws, for the chair of each meeting of the stockholders to, amongst other items, adjourn the meeting and/or as permitted under the DGCL to adjourn the Annual Meeting for any purpose, or to postpone the Annual Meeting before it is convened, without the consent of any stockholder of the Company, provided that the Merger Agreement includes certain limitations on the Company’s ability to postpone or adjourn the Annual Meeting. If there are not sufficient votes at the time of the Annual Meeting to approve the Merger Proposal in accordance with the requisite stockholder vote, then the stockholders of the Company may be asked to vote on the Adjournment Proposal. In the event that the Adjournment Proposal is not approved by the Company’s stockholders at such time, the chair of the Annual Meeting may nevertheless adjourn or postpone the Annual Meeting to another place, if applicable, date or time, in accordance with the By-Laws.

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THE ANNUAL MEETING

If the Annual Meeting is adjourned, we are not required to give notice of the time and place of the adjourned meeting if announced at the Annual Meeting at which the adjournment is taken, unless the adjournment is for more than 30 days or the Board fixes a new record date for the Annual Meeting. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting. All proxies will be voted in the same manner as they would have been voted at the original convening of the Annual Meeting, except for any proxies that have been effectively revoked or withdrawn prior to the time the proxy is voted at the reconvened meeting.

Anticipated Date of Completion of the Merger

We are working towards completing the Merger as soon as possible, although we have agreed that Parent is not required to consummate the Merger prior to July 1, 2021. Assuming timely receipt of required regulatory approvals and satisfaction of other closing conditions, including the approval by our stockholders of the Merger Proposal, we anticipate that the Merger will be completed mid-2021. If our stockholders vote to approve the Merger Proposal, the Merger will become effective as promptly as practicable following the satisfaction or waiver of the other conditions to the Merger, subject to the terms of the Merger Agreement. See “The Merger Agreement—Closing and Effective Time of the Merger” beginning on page 113.

Rights of Stockholders Who Seek Appraisal

If the Merger is completed, the Company’s stockholders who do not vote in favor of the adoption of the Merger Agreement are entitled to appraisal rights under Section 262 of the DGCL in connection with the Merger, but only if they fully comply with all the applicable legal requirements for Section 262 of the DGCL, which are summarized in this proxy statement in the section entitled “Appraisal Rights” beginning on page 241 and set forth in their entirety in Section 262 of the DGCL (attached to this proxy statement as Annex D). This means you may be entitled to have the fair value of your shares of our common stock determined by the Delaware Court of Chancery and to receive payment based on that valuation in lieu of the per share Merger Consideration if you follow exactly the procedures set forth in Section 262 of the DGCL. The ultimate amount you may receive in an appraisal proceeding may be less than, equal to or more than the amount you would have received under the Merger Agreement.

To exercise your appraisal rights, you must, among other things, submit a written demand for appraisal to the Company before the vote is taken on the adoption of the Merger Agreement (and must not fail to perfect or effectively withdraw your demand or otherwise waive or lose your rights to appraisal) and you must not vote (either virtually or by proxy) in favor of the Merger Proposal. If you fail to follow exactly the procedures set forth in Section 262 of the DGCL, you will lose your appraisal rights. The requirements for exercising appraisal rights are further described in the section entitled “Appraisal Rights” beginning on page 241 and the text of the DGCL appraisal rights statute reproduced in its entirety as Annex D to this proxy statement. We encourage you to read these provisions carefully and in their entirety. If you hold your shares of our common stock through a bank, brokerage firm or other nominee and you wish to exercise your appraisal rights, you should consult with your bank, brokerage firm or other nominee to determine the appropriate procedures for the making of a demand for appraisal by your bank, brokerage firm or other nominee. In view of the complexity of the DGCL, stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors promptly.

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THE ANNUAL MEETING

Solicitation of Proxies; Payment of Solicitation Expenses

We will bear the costs of solicitation of proxies for the Annual Meeting. In addition to solicitation by mail, directors, officers and our regular employees may solicit proxies from stockholders by telephone, personal interview or otherwise. These directors, officers and employees will not receive additional compensation, but may be reimbursed for out-of-pocket expenses in connection with this solicitation. In addition to solicitation by our directors, officers and employees, we have engaged Alliance Advisors to assist in the solicitation of proxies and provide related advice and informational support, for a fee of $16,000 and telephone charges. The Company has agreed to reimburse Alliance Advisors for certain out-of-pocket fees and expenses and will also indemnify Alliance Advisors, its subsidiaries and their respective directors, officers, employees and agents against certain claims, liabilities, losses, damages and expenses. The Company may advance monies to Alliance Advisors to pay on the Company’s behalf charges rendered by banks, brokers or their agents for their expenses in forwarding proxy materials to beneficial owners of our common stock.

Questions and Additional Information

If you have more questions about the Merger, the Annual Meeting or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact Alliance Advisors, our proxy solicitor, by calling toll-free at 833-550-0986. Banks and brokers should also contact Alliance Advisors by calling toll-free at 833-550-0986.

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PROPOSAL 1

PROPOSAL 1—MERGER PROPOSAL

Your Board of Directors recommends a vote FOR the adoption of the Merger Agreement and the transactions contemplated thereby.

Parties to the Merger

The Company

Navistar International Corporation
2701 Navistar Drive
Lisle, Illinois 60532

The Company, a Delaware corporation, is an international manufacturer of International^® brand commercial trucks, proprietary diesel engines, and IC Bus^® brand school and commercial buses, as well as a provider of service parts for trucks and diesel engines. The Company also provides retail, wholesale, and lease financing services for its trucks and parts. The Company operates in four principal industry segments: Trucks, Parts, Global Operations and Financial Services. The Company’s core business is the truck and parts markets for the U.S. and Canada, where the Company participates primarily in the Class 6 through 8 vehicle markets and, this year, expanded into the Class 4/5 market with our International^® CV™ product. The Company has one of the largest commercial vehicle parts distribution networks in the U.S. and a captive finance company. Further, this year the Company expanded its service network in North America to approximately 1,000 locations, one of the largest networks in North America. Outside of the Company’s core markets, International^® is one of the leading truck brands in Mexico and much of Latin America; the Company is the largest independent diesel engine company in Brazil. The Company also exports trucks, buses, and engines to niche markets around the world. The Company, formerly known as International Harvester Company, was originally formed in 1847 by Cyrus McCormick as the McCormick Harvesting Machine Company to manufacture and market the McCormick horse-drawn reaper for which he had received a patent in 1834.

Parent

TRATON SE
Dachauer Str. 641
80995 Munich

Parent is a Societas Europaea, whose shares are listed for trading on the Frankfurt Stock Exchange, and Nasdaq Stockholm, each under the symbol “8TRA”. Parent is an indirect subsidiary of Volkswagen AG and its principal business purpose is the holding of investments in companies whose business purpose is the manufacturing and distribution of vehicles and engines of any kind, as well as such items’ ancillary equipment and all plants, machinery, tools, and other technical products.

Merger Sub

Dusk Inc.
c/o TRATON SE
Dachauer Str. 641
80995 Munich

Merger Sub, a Delaware corporation and a wholly owned indirect subsidiary of Parent, was formed solely for the purposes of effecting the Merger. Merger Sub has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the Merger Agreement and the Voting Agreements.

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PROPOSAL 1

SPECIAL FACTORS

This section of the proxy statement describes certain material aspects of the proposed Merger. This section may not contain all of the information that is important to you. You should carefully read this entire proxy statement and the documents incorporated herein by reference, including the full text of the Merger Agreement, for a more complete understanding of the Merger. A copy of the Merger Agreement is attached as Annex A to this proxy statement. In addition, important business and financial information about the Company is included in or incorporated into this proxy statement by reference. See “Where You Can Find More Information” beginning on page 246.

Overview of Special Factors

The Merger is a “going-private” transaction under SEC rules and the Exchange Act. Accordingly, Rule 13e-3 and related rules under the Exchange Act require that the Company and the Purchaser Group Members make certain disclosures regarding the Merger. This “Special Factors” section contains various information that you should read carefully. For example, the section entitled “—Plans for the Company After the Merger” explains the plans for the surviving entity after the completion of the Merger. The section entitled “—Purchaser Group Members’ Purposes and Reasons for the Merger” explains, among other things, Parent’s purposes for the Merger. The sections entitled “The Merger—Reasons for the Merger; Recommendation of the Company’s Board of Directors” and “Special Factors—Position of the Purchaser Group Members as to the Fairness of the Merger” respectively explain why the Board, on the one hand, and the Purchaser Group Members, on the other hand, believe the Merger is fair and reasonable to, and in the best interests of, the Company and the Company’s unaffiliated stockholders. The sections entitled “—Opinion of Bank of America Europe DAC” beginning on page 55 and “—Opinion of Goldman Sachs Bank Europe SE” beginning on page 62 respectively summarize the process and methodologies followed by Bank of America Europe DAC and Goldman Sachs Bank Europe SE in rendering their respective opinions to the Parent’s Executive Board and Parent’s Supervisory Board. You are encouraged to carefully read this “Special Factors” section and this entire proxy statement, along with the documents incorporated herein by reference.

Purchaser Group Members’ Purposes and Reasons for the Merger

Under the SEC rules governing “going private” transactions, each of the Purchaser Group Members is an affiliate of the Company that is engaged in the “going private” transaction and, therefore, each is required to express its purposes and reasons for the Merger to the Company’s “unaffiliated security holders,” as defined under Rule 13e‑3 of the Exchange Act. The Purchaser Group Members are making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act.

The Purchaser Group Members have undertaken to pursue the transaction at this time in light of the opportunities they perceive to enhance Parent’s financial performance and competitive position by means of acquiring the Company through the Merger. For the Purchaser Group Members, the purpose of the Merger is to enable them to acquire control of the Company, through a transaction in which the stockholders of the Company (other than the Purchaser Group Members and their affiliates) will be cashed out for $44.50 per share of the Company’s common stock, and Parent will bear the rewards and risks of the ownership of the Company after completion of the Merger. In the opinion of the Purchaser Group Members, the Merger will provide a number of benefits to the Purchaser Group Members and the Company that would follow from the Company becoming a wholly owned indirect subsidiary of Parent, including, but not limited to:

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PROPOSAL 1

Parent also considered the opinion of BofA Securities, dated November 7, 2020, to Parent’s Boards as to the fairness, from a financial point of view and as of the date of the opinion, to Parent of the Merger Consideration to be paid by Parent, as more fully described below in the section entitled “—Opinion of Bank of America Europe DAC” beginning on page 55.

Parent also considered the opinion of Goldman Sachs Bank Europe SE, dated November 7, 2020, to Parent’s Boards that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the Merger Consideration to be paid by Parent was fair, from a financial point of view, to Parent, as more fully described below in the section entitled “—Opinion of Goldman Sachs Bank Europe SE” beginning on page 62.

The Purchaser Group Members have undertaken to pursue the Merger at this time for the reasons described above.

Although the Purchaser Group Members believe that there will be opportunities associated with their investment in the Company, the Purchaser Group Members realize that there are also substantial risks (including the risks and uncertainties relating to the prospects of the Company) and that such opportunities may never be fully realized. Further, following the Merger, there will be no trading market for the equity securities of the Company, making Purchaser Group Members’ investment in the Company illiquid.

The Purchaser Group Members believe that structuring the transaction as a merger is preferable to other transaction structures because (i) it will enable the Purchaser Group Members to acquire all of the outstanding shares of common stock of the Company at the same time and (ii) it represents an opportunity for the Company’s holders of common stock and Series D Stock (except Parent and its affiliates) to receive a premium for their shares, representing an approximate 84.88% premium to the closing price of shares of the Company’s common stock of $24.07 on January 30, 2020, the last trading day prior to the announcement by Parent of its unsolicited offer to acquire the Company for $35.00 per share, and a 58.14% premium to the volume-weighted average price of shares of the Company’s common stock for the 30 trading days ended January 30, 2020.

Further, the Purchaser Group Members believe that structuring the transaction as a merger provides a prompt and orderly transfer of ownership of the Company in a single step, without the necessity of financing separate purchases of shares of the Company’s common stock in a tender offer and implementing a second-step merger to acquire any shares of the Company’s common stock not tendered into any such tender offer, and without incurring any additional transaction costs associated with such activities.

As of November 5, 2020, Parent beneficially owns approximately 16.7% of the issued and outstanding shares of Company common stock. Following consummation of the Merger, Parent will own 100% of the shares of Company common stock and will have a corresponding interest in the Company’s net book value and net earnings or losses. The Company’s net income (loss) for the fiscal year ended October 31, 2020 was approximately $(347,000,000) and the Company’s net book value per share of Company common stock as of October 31, 2020 was approximately ($38.38). Net book value per share of Company common stock as of October 31, 2020 was computed by dividing the total equity of $(3,822,000,000) by the total shares of Company common stock outstanding on October 31, 2020 of 99,576,093.The table below sets forth the direct and indirect interests in the Company’s net book value per share of Company common stock and net earnings of Parent before the Merger and Parent immediately after the Merger, based on the net book value at October 31, 2020, and net income for the fiscal year ended October 31, 2020.

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PROPOSAL 1

Plans for the Company After the Merger

It is expected that the Company’s operations will be conducted after the Merger substantially as they currently are being conducted, except that it will cease to be a publicly traded company and will instead be a privately held indirect subsidiary of Parent. Following the completion of the Merger, the Company will no longer be subject to the Exchange Act and New York Stock Exchange compliance and reporting requirements and the related direct and indirect costs and expenses, and may experience positive effects on profitability as a result of the elimination of such costs and expenses.

The directors of the Company upon the consummation of the Merger will consist of (i) the persons serving as directors of Merger Sub as of immediately prior to the Effective Time and (ii) the director elected by the holder of the Series B Nonconvertible Junior Preference Stock, $1.00 par value, of the Company as of immediately prior to the Effective Time, and upon consummation of the Merger, the officers of the Company will be the persons serving as officers of the Company as of immediately prior to the Effective Time, in each case until their successor is duly elected or appointed and qualified or until the earlier of his or her death, resignation or removal, as the case may be.

The Purchaser Group Members do not have any current plans or proposals to cause the Company to engage in any of the following:

Nevertheless, as part of integration planning and following consummation of the Merger, the surviving corporation’s management and board of directors expect to conduct a review of the Company and its assets, corporate and capital structure, capitalization, operations, business, properties and personnel to determine what changes, if any, would be desirable following the Merger to enhance the business and operations of the Company and may cause the Company to engage in the types of transactions set forth above if the management or the board of directors decides that such transactions are in the best interest of the Company upon such review. The Purchaser Group Members expressly reserve the right to make any changes to the Company operations after consummation of the Merger that they deem appropriate in light of such evaluation and review or in light of future developments.

Position of the Purchaser Group Members as to the Fairness of the Merger

Under the SEC rules governing “going private” transactions, each of the Purchaser Group Members is an affiliate of the Company that is engaged in the “going private” transaction and, therefore, is required to express its position as to the fairness of the Merger to the Company’s unaffiliated security holders. The Purchaser Group Members are making the statements included in this section solely for the purposes of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The views of the Purchaser Group Members as to the fairness of the Merger (which is the Rule 13e-3 transaction for which a Schedule 13E-3 was filed with the SEC) should not be construed as a recommendation to any of the Company’s unaffiliated security holders, as to how such stockholder should vote on the proposal to approve the Merger Agreement.

The Purchaser Group Members believe that the Merger (which is the Rule 13e-3 transaction for which the Schedule 13E-3 was filed with the SEC) is fair to the Company’s unaffiliated security holders on the basis of the factors described below.

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PROPOSAL 1

The Purchaser Group Members, including Parent’s designated directors on the Board, did not participate in the deliberations of the Board, regarding, or receive advice from the Company’s or the Board’s legal or financial advisors as to, the fairness of the Merger. The Purchaser Group Members have not performed, or engaged a financial advisor to perform, any valuation or other analysis for the purpose of assessing the fairness of the Merger to the Company’s unaffiliated security holders. Based on the knowledge and analysis by the Purchaser Group Members of available information regarding the Company, and the factors considered by, and the analysis and resulting conclusions of, the Parent’s Boards, the Volkswagen Management Board and the Volkswagen Supervisory Board and the Purchaser Group Members discussed in “Special Factors—Purchaser Group Members’ Purposes and Reasons for the Merger,” the Purchaser Group Members believe that the Merger is substantively and procedurally fair to the Company’s unaffiliated security holders. In particular, the Purchaser Group Members believe that the Merger is both procedurally and substantively fair to the Company’s unaffiliated holders of common stock based on their consideration of the following factors, among others, which are not presented in any relative order of importance:

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PROPOSAL 1

The Purchaser Group Members did not find it practicable to assign, nor did they assign, specific relative weights to the individual factors considered in reaching their conclusion as to fairness. The Purchaser Group Members also did not consider the liquidation value of the Company’s assets, and did not perform a liquidation analysis, because they consider the Company to be a viable going concern. Therefore, no appraisal of liquidation value was sought for purposes of valuing the shares of the Company’s common stock, and the Purchaser Group Members believe that the liquidation value of the shares of the Company’s common stock is irrelevant to a determination as to whether the proposed Merger is fair to the Company’s unaffiliated security holders.

The Purchaser Group Members believe that the Merger is both procedurally and substantively fair to the Company’s holders of shares of Series D Stock, because the Series D Stock is convertible into common stock (as to which the views of the Purchaser Group Members are set out above), and the Series D Stock will be converted into the portion of the per share Merger Consideration that would have been payable in respect of such share of Series D Stock had such share converted into common stock pursuant to the terms of the certificate of incorporation of the Company. The Purchaser Group Members believe that the Merger is both procedurally and substantively fair to the holder of the Company’s sole share of Series B Stock because the Series B Stock will remain outstanding as one share of Series B Stock of the surviving corporation.

The Purchaser Group Members did not consider net book value, which is an accounting concept, for purposes of determining the fairness of the Merger Consideration to the Company’s unaffiliated security holders because, in the Purchaser Group Members’ view, net book value is neither indicative of the Company’s market value nor its value as a going concern, but rather is an indicator of historical costs.

While the Purchaser Group Members considered the trading history of the shares of the Company’s common stock and noted that at various times, this trading history reflected prices above the $44.50 to be paid for each share of Company common stock held by the Company’s stockholders as part of the Merger Consideration, the Purchaser Group Members concluded that these factors were not important in determining the value of the shares of the Company’s common stock as of the date of the proposed Merger. In the Purchaser Group Members’ judgment, the historical trading prices for the Company’s common stock are not indicative of the value of the shares of the Company’s common stock as of the date of the proposed Merger in light of the Company’s current business operations and future prospects.

The Purchaser Group Members’ consideration of the factors described above reflects their assessment of the fairness of the Merger. The Purchaser Group Members implicitly considered the value of the Company in a sale as a going concern by taking into account the Company’s current and anticipated business, financial condition, results of operations, prospects and other forward-looking matters.

The foregoing discussion of the information and factors considered is not intended to be exhaustive but includes the material factors considered by the Purchaser Group Members. The Purchaser Group Members’ views as to the fairness of the proposed Merger should not be construed as a recommendation to Company’s stockholders to approve the Merger Agreement. The Purchaser Group Members do not make any recommendation as to how the Company’s stockholders should vote their shares of Company common stock on the Merger.

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PROPOSAL 1

Fees and Expenses

Total fees and expenses incurred or to be incurred by the Company in connection with the Merger are estimated at this time to be as follows:

Total fees and expenses incurred or to be incurred by Parent in connection with the Merger are estimated at this time to be as follows:

Opinion of Bank of America Europe DAC

Parent has retained BofA Securities to act as Parent’s financial advisor in connection with the Merger. BofA Securities is an internationally recognized investment banking firm which is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. Parent selected BofA Securities to act as Parent’s financial advisor in connection with the Merger on the basis of BofA Securities’ experience in transactions similar to the Merger, its reputation in the investment community and its familiarity with Parent and its business.

On November 7, 2020, at a meeting of Parent’s Boards held to evaluate the Merger, BofA Securities delivered to Parent’s Boards an oral opinion, which was confirmed by delivery of a written opinion dated November 7, 2020, to the effect that, as of the date of the opinion and based on and subject to various assumptions and limitations described in its opinion, the Merger Consideration to be paid by Parent was fair, from a financial point of view, to Parent.

The full text of BofA Securities’ written opinion to Parent’s Boards, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Annex G to this document and is incorporated by reference herein in its entirety. The following summary of BofA Securities’ opinion is qualified in its entirety by reference to the full text of the opinion. BofA Securities delivered its opinion to Parent’s Boards for the benefit and use of Parent’s Boards (in their capacities as such) in connection with and for purposes of their respective evaluation of the Merger Consideration to be paid by Parent. BofA Securities’ opinion does not address any other aspect of the Merger and no opinion or view was expressed as to the relative merits of the Merger in comparison to other strategies or transactions that might be available to Parent or in which Parent might engage or as to the underlying business decision of Parent to proceed with or effect the Merger. BofA Securities’ opinion does not address any other aspect of the Merger and does not constitute a recommendation to any stockholders as to how to vote or act in connection with the Merger or any other matter.

In connection with rendering its opinion, BofA Securities has, among other things:

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PROPOSAL 1

In arriving at its opinion, BofA Securities assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with it and relied upon the assurances of the managements of Parent and Navistar that they were not aware of any facts or circumstances that would make such information or data inaccurate or misleading in any material respect. With respect to the Navistar Forecasts, BofA Securities was advised by Navistar, and assumed, with the consent of Parent, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Navistar as to the future financial performance of Navistar. With respect to the Parent-Navistar Forecasts, the Synergies and the Balance Sheet Adjustments, BofA Securities assumed, at the direction of Parent, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Parent as to the future financial performance of Navistar and the other matters covered thereby and, based on the assessments of the management of Parent as to the relative likelihood of achieving the future financial results reflected in the Navistar Forecasts and the Parent-Navistar Forecasts, BofA Securities relied, at the direction of Parent, on the Parent-Navistar Forecasts for purposes of its opinion. BofA Securities relied, at Parent’s direction, on the assessments of the management of Parent as to Parent’s ability to achieve the Synergies and was advised by Parent, and assumed, that the Synergies will be realized in the amounts and at the times projected. BofA Securities did not make and was not provided with any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Navistar or Parent, nor did it make any physical inspection of the properties or assets of Navistar or Parent, and it relied, at the direction of Parent, on the Balance Sheet Adjustments for purposes of its opinion. BofA Securities did not evaluate the solvency or fair value of Navistar or Parent under any laws relating to bankruptcy, insolvency or similar matters. BofA Securities assumed, at the direction of Parent, that the Merger would be consummated in accordance with its terms, without waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the Merger, no delay, limitation, restriction or condition, including any divestiture requirements or amendments or modifications, would be imposed that would have an adverse effect on Navistar, Parent or the contemplated benefits of the Merger. BofA Securities also assumed, at the direction of Parent, that the final executed Merger Agreement would not differ in any material respect from the Draft Agreement reviewed by it.

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BofA Securities expressed no view or opinion as to any terms or other aspects of the Merger (other than the consideration to the extent expressly specified in its opinion), including, without limitation, the form or structure of the Merger and the entry into the Voting Agreements. BofA Securities’ opinion was limited to the fairness, from a financial point of view, to Parent of the consideration to be paid in the Merger and no opinion or view was expressed with respect to any consideration received in connection with the Merger by the holders of any class of securities, creditors or other constituencies of any party. In addition, no opinion or view was expressed with respect to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to any of the officers, directors or employees of any party to the Merger, or class of such persons, relative to the consideration. Furthermore, no opinion or view was expressed as to the relative merits of the Merger in comparison to other strategies or transactions that might be available to Parent or in which Parent might engage or as to the underlying business decision of Parent to proceed with or effect the Merger. In addition, BofA Securities expressed no opinion or recommendation as to how any stockholder should vote or act in connection with the Merger or any related matter.

BofA Securities’ opinion was necessarily based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to BofA Securities as of, the date of its opinion. At the time of BofA Securities’ opinion, the credit, financial and stock markets were experiencing unusual volatility and BofA Securities expressed no opinion or view as to any potential effects of such volatility on Parent, Navistar or the Merger. It should be understood that subsequent developments may affect its opinion, and BofA Securities does not have any obligation to update, revise or reaffirm its opinion. The issuance of BofA Securities’ opinion was approved by the Bank of America Europe DAC Fairness Opinion Review Committee. Except as described in this summary, Parent imposed no other limitations on the investigations made or procedures followed by BofA Securities in rendering its opinion.

The discussion set forth below in the sections entitled “Bank of America Europe DAC Financial Advisor Materials” represents a brief summary of the material financial analyses presented by BofA Securities to Parent’s Boards in connection with its opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses performed by BofA Securities, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses performed by BofA Securities. Considering the data set forth in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses performed by BofA Securities.

A copy of BofA Securities’ opinion, dated November 7, 2020, to Parent’s Boards is attached as Annex G to this proxy statement. A copy of BofA Securities’ financial presentation, dated November 7, 2020, to Parent’s Boards, referred to as the November 7, 2020 financial presentation, is attached as an exhibit to the Schedule 13E-3 filed with the SEC in connection with the Merger and incorporated herein by reference. BofA Securities’ opinion and the November 7, 2020 financial presentation will be made available for inspection and copying at the Company’s principal executive offices during its regular business hours by any interested Company stockholder or its representative who has been so designated in writing to the Company’s Secretary.

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Bank of America Europe DAC Financial Advisor Materials

The November 7, 2020 financial presentation provided to the Parent’s Boards included the following material financial analyses:

Selected Publicly Traded Companies Analysis.

BofA Securities reviewed publicly available financial and stock market information for Navistar and the following eight publicly traded companies in the Truck OEM industry (the “Truck OEM Selected Companies”), the Capital Goods industry (the “Capital Goods Selected Companies”) and the CV Supply industry (the “CV Supply Selected Companies” and together with the Truck OEM Selected Companies and the Capital Goods Selected Companies, the “Selected Companies”):

BofA Securities reviewed, among other things, enterprise values of the Selected Companies, calculated as equity values based on closing stock prices on November 6, 2020, less industrial cash and cash equivalents, plus industrial debt, plus preferred shares, plus minority/non-controlling interest, less investments in unconsolidated subsidiaries and affiliates, less book value of financial services businesses, and adjusted for after-tax pension liabilities, as applicable, as a multiple of the Selected Companies’ industrial businesses’ fiscal year 2022, a period consistent with the Company’s fiscal year 2022, estimated earnings before interest, taxes, depreciations and amortization, commonly referred to as EBITDA, adjusted for pension liabilities and associated carrying costs and for capitalized development costs under International Financial Reporting Standards (“Ind. Pen. Adj. EBITDA”, and such multiple, “2022 Ind. Pen. Adj. EBITDA”). The overall low to high fiscal year 2022 Ind. Pen. Adj. EBITDA multiples observed for the Selected Companies were 3.5x to 14.8x (with an average of 8.5x and a median of 7.7x). BofA Securities then applied fiscal year 2022 Ind. Pen. Adj. EBITDA multiples of 7.0x to 8.0x derived from the Selected Companies, based on its professional judgment and experience, to the Company’s fiscal year 2022 Ind. Pen. Adj. EBITDA. Estimated financial data of the Selected Companies were based on publicly available research analysts’ estimates, and estimated financial data of the Company were based on the Parent-Navistar Forecasts. This analysis indicated the following approximate implied per share equity value reference ranges for the Company, rounded to the nearest $0.25, as compared to the Merger Consideration:

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No company used in this analysis is identical or directly comparable to the Company. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which the Company was compared.

Selected Precedent Transactions Analysis.

BofA Securities reviewed, to the extent publicly available, financial information relating to the following four selected announced transactions involving Truck OEM manufacturers:

BofA Securities reviewed transaction values, calculated as the enterprise value implied for the target company based on the consideration payable in the selected transaction, as a multiple of the target company’s last 12 months’ (“LTM”) Ind. Pen. Adj. EBITDA. The overall low to high multiples of the target companies’ LTM Ind. Pen. Adj. EBITDA for the selected transactions were 8.6x to 11.9x (with an average of 9.9x and a median of 9.7x). BofA Securities then applied LTM Ind. Pen. Adj. EBITDA multiples of 8.5x to 12.0x derived from the selected transactions, based on its professional judgment and experience, to the Company’s fiscal year 2019 Ind. Pen. Adj. EBITDA derived from the Parent-Navistar Forecasts and fiscal year 2020 estimated Ind. Pen. Adj. EBITDA derived from publicly available research analysts’ estimates as of January 30, 2020, one day prior to the initial offer by Parent. Based on its professional judgment and experience, BofA Securities believed that fiscal year 2019 Ind. Pen. Adj. EBITDA and fiscal year 2020 estimated Ind. Pen. Adj. EBITDA would better reflect the normalized operation of the Company’s business than LTM Ind. Pen. Adj. EBITDA at the time of the deal announcement, in light of the impact that COVID-19 had on the Company’s business during the LTM period. Estimated financial data of the selected transactions were based on publicly available information. This analysis indicated the following approximate implied per share equity value reference ranges for the Company, rounded to the nearest $0.25, as compared to the Merger Consideration:

No company, business or transaction used in this analysis is identical or directly comparable to the Company or the Merger. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the acquisition or other values of the companies, business segments or transactions to which the Company and the Merger were compared.

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Discounted Cash Flow Analysis.

BofA Securities performed a discounted cash flow analysis of the Company to calculate the estimated present value of the standalone unlevered, after-tax free cash flows that the Company was forecasted to generate from the fourth fiscal quarter of 2020 through fiscal year 2025 based on the Parent-Navistar Forecasts, in which the terminal year assumes mid-cycle Industrial Revenue, 6% Ind. Pen. Adj. EBIT margin without Synergies and 8% Ind. Pen. Adj. EBIT margin with Synergies, normalized capital expenditures equal to 3% of Industrial Revenue, depreciation equal to 99% of capital expenditures, no changes in net working capital, a tax rate of 26% and certain Balance Sheet Adjustments estimated by Parent management to be in the amount of $621,000,000 (i) with and without the Synergies and (ii) with and without the value of net operating loss (“NOL”) tax attributes of the Company. As used in this section, “Ind. Pen. Adj. EBIT” means Ind. Pen. Adj. EBITDA less depreciation and amortization. In each case, BofA Securities calculated terminal values for the Company by extrapolating the Company’s equity value per share at perpetuity growth rates of 0.75% to 1.25%, which perpetuity growth rates were selected based on BofA Securities’ professional judgment and experience as well as guidance from Parent management. In each case, the cash flows and terminal values were then discounted to present value as of July 31, 2020 using discount rates ranging from 7.0% - 9.0%, which were based on an estimate of the Company’s weighted average cost of capital. From the resulting enterprise values, BofA Securities adjusted for net debt, tax adjusted pension liabilities, minority interest, and book value of financial services as well as other customary adjustments as identified by Parent management as of July 31, 2020 to derive equity values. This analysis indicated the following approximate implied per share equity value reference ranges for the Company, rounded to the nearest $0.25, as compared to the Merger Consideration:

Other Factors.

BofA Securities also noted certain additional factors that were not considered part of BofA Securities’ material financial analyses with respect to its opinion but were referenced for informational purposes, including, among other things, the following:

Miscellaneous.

As noted above, the discussion set forth above in the section entitled “Bank of America Europe DAC Financial Advisor Materials” is a summary of the material financial analyses presented by BofA Securities to the Boards in connection with its opinion and is not a comprehensive description of all analyses undertaken or factors considered by BofA Securities in connection with its opinion. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to partial analysis or summary description. BofA Securities believes that its analyses summarized above must be considered as a whole. BofA Securities further believes that selecting portions of its analyses and the factors considered or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying BofA Securities’ analyses and opinion. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analysis referred to in the summary.

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In performing its analyses, BofA Securities considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of Parent and the Company. The estimates of the future performance of Parent and the Company in or underlying BofA Securities’ analyses are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than those estimates or those suggested by BofA Securities’ analyses. These analyses were prepared solely as part of BofA Securities’ analysis as to the fairness, from a financial point of view and as of the date of the opinion, to Parent of the Merger Consideration to be paid by Parent in the Merger and were provided to the Boards in connection with the delivery of BofA Securities’ opinion. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or the prices at which any securities have traded or may trade at any time in the future. Accordingly, the estimates used in, and the ranges of valuations resulting from, any particular analysis described above are inherently subject to substantial uncertainty and should not be taken to be BofA Securities’ view of the actual values of Parent or the Company.

The type and amount of consideration payable in the Merger was determined through negotiations between Parent and the Company, rather than by any financial advisor, and was approved by the Parent’s Boards. The decision to enter into the Merger Agreement was solely that of the Parent’s Boards. As described above, BofA Securities’ opinion and analyses were only one of many factors considered by the Parent’s Boards in their evaluation of the proposed Merger and should not be viewed as determinative of the views of Parent’s Boards or management with respect to the Merger or the Merger Consideration.

Parent has agreed to pay BofA Securities for its services in connection with the Merger an aggregate fee of EUR 10,800,000, a portion of which was payable upon delivery of its opinion and a significant portion of which is contingent upon consummation of the Merger. Parent also has agreed to reimburse BofA Securities for its expenses incurred in connection with BofA Securities’ engagement and to indemnify BofA Securities, any controlling person of BofA Securities and each of their respective directors, officers, employees, agents and affiliates against specified liabilities, including liabilities under the federal securities laws.

BofA Securities and its affiliates comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and financial advisory services and other commercial services and products to a wide range of companies, governments and individuals. In the ordinary course of their businesses, BofA Securities and its affiliates may invest on a principal basis or on behalf of customers or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions in equity, debt or other securities or financial instruments (including derivatives, bank loans or other obligations) of Parent, the Company and certain of their respective affiliates.

BofA Securities and its affiliates in the past have provided, currently are providing, and in the future may provide investment banking, commercial banking and other financial services to Parent and certain of its affiliates as well as its major stockholder and have received or in the future may receive compensation for the rendering of these services, including (i) having acted or acting as financial advisor to Parent in connection with a merger and acquisitions transaction and (ii) having acted or acting as lead arranger, bookrunner in various debt and equity offerings for, and a lender under, certain credit facilities and other credit arrangements of Parent and/or certain of its affiliates (including acquisition financing). BofA Securities has advised Parent and Volkswagen that, based on its records, from November 1, 2018 through October 31, 2020, BofA Securities and its affiliates derived aggregate revenues from Parent of approximately $250,000, and from Volkswagen and Volkswagen’s affiliates of more than $25,000,000, in each case for investment and corporate banking services.

In addition, BofA Securities and its affiliates currently are providing and in the future may provide investment banking, commercial banking and other financial services to the Company and may receive compensation for the rendering of these services, including having acting as lender under, certain credit facilities and other credit arrangements of the Company (including acquisition financing and having provided or providing certain treasury and management services and products). From November 1, 2018 through October 31, 2020, BofA Securities and its affiliates derived aggregate revenues from the Company and its affiliates of approximately $18,000,000 for investment and corporate banking services.

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Opinion of Goldman Sachs Bank Europe SE

Goldman Sachs Bank Europe SE rendered its opinion to Parent’s Executive Board and Parent’s Supervisory Board that, as of November 7, 2020 and based upon and subject to the factors and assumptions set forth therein, the $44.50 in cash per share of the Company’s common stock to be paid by Parent pursuant to the Merger Agreement was fair from a financial point of view to Parent. At Parent’s direction, Goldman Sachs Bank Europe SE also orally described for the Volkswagen Management Board and the Volkswagen Supervisory Board on November 7, 2020 the opinion Goldman Sachs Bank Europe SE had orally rendered to Parent’s Executive Board and Parent’s Supervisory Board to the effect that the $44.50 per share of the Company’s common stock to be paid by Parent pursuant to the Merger Agreement was fair from a financial point of view to Parent, and provided an overview of the financial analyses summarized in this section, in each case on a non-reliance basis and solely for informational purposes of Volkswagen AG in connection with its internal corporate approval as majority stockholder of Parent of Parent’s acquisition of the Company.

The full text of the written opinion of Goldman Sachs Bank Europe SE, dated November 7, 2020, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex H. The summary of Goldman Sachs Bank Europe SE’s opinion contained in this proxy statement is qualified in its entirety by reference to the full text of Goldman Sachs Bank Europe SE’s written opinion. Goldman Sachs Bank Europe SE provided advisory services and its opinion for the information and assistance of Parent’s Executive Board and Parent’s Supervisory Board in connection with their consideration of the Merger. The Goldman Sachs Bank Europe SE opinion is not a recommendation as to how any holder of shares of the Company’s common stock should vote with respect to the Merger, or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs Bank Europe SE reviewed, among other things:

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Goldman Sachs Bank Europe SE also held discussions with members of the senior management of Parent regarding their assessment of the past and current business operations, financial condition and future prospects of Parent and the Company and the strategic rationale for, and the potential benefits of, the Merger; reviewed the reported price and trading activity for the ordinary bearer shares with no par value (auf den Inhaber lautende Stammaktien ohne Nennbetrag) of Parent, which is referred to in this section as “Parent Common Stock”, and the shares of the Company’s common stock; compared certain financial and stock market information for the Company with similar information for certain other companies the securities of which are publicly traded; and performed such other studies and analyses, and considered such other factors, as Goldman Sachs Bank Europe SE deemed appropriate.

For purposes of rendering this opinion, Goldman Sachs Bank Europe SE, with Parent’s consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs Bank Europe SE assumed with Parent’s consent that the Business Forecasts, including the Synergies and Tax Forecasts, were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Parent and that Parent will retain its investment grade rating profile following the consummation of the Merger, facilitated by the support of Volkswagen as the corporate parent of Parent. Goldman Sachs Bank Europe SE did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities, and any liabilities resulting from actual or potential arbitration, litigation, claims, investigations or other proceedings) of Parent or the Company or any of their respective subsidiaries and was not furnished with any such evaluation or appraisal. Goldman Sachs Bank Europe SE assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on Parent or the Company or on the expected benefits of the Merger in any way meaningful to its analysis. Goldman Sachs Bank Europe SE has also assumed that the Merger will be consummated on the terms set forth in the Merger Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs Bank Europe SE’s opinion does not address the underlying business decision of Parent to engage in the Merger, or the relative merits of the Merger as compared to any strategic alternatives that may be available to Parent; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs Bank Europe SE’s opinion addresses only the fairness from a financial point of view to Parent, as of the date of the opinion, of the $44.50 in cash per share of the Company’s common stock to be paid by Parent pursuant to the Merger Agreement. Goldman Sachs Bank Europe SE’s opinion does not express any view on, and does not address, any other term or aspect of the Merger Agreement or the Merger or any term or aspect of any other agreement or instrument contemplated by the Merger Agreement or entered into or amended in connection with the Merger, including for the purpose of financing the Merger, the fairness of the Merger to, or any consideration received in connection therewith by, the holders of any class of securities, creditors, including providers of financing, or other constituencies of Parent; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the stockholders, officers, directors or employees of the Company, or any class of such persons, in connection with the Merger, whether relative to the $44.50 in cash per share of the Company’s common stock to be paid by Parent pursuant to the Merger Agreement or otherwise. Goldman Sachs Bank Europe SE’s opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs Bank Europe SE as of, the date of the opinion and Goldman Sachs Bank Europe SE assumes no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. In addition, Goldman Sachs Bank Europe SE does not express any opinion as to the prices at which shares of Parent Common Stock and shares of the Company’s common stock will trade at any time, as to the potential effects of volatility in the credit, financial and stock markets on Parent or the Company or the Merger, or as to the impact of the Merger on the solvency or viability of Parent or the Company or the ability of Parent or the Company to pay their respective obligations when they come due. Goldman Sachs Bank Europe SE’s advisory services and its opinion were provided for the information and assistance of Parent’s Executive Board and Parent’s Supervisory Board in connection with their consideration of the Merger and such opinion does not constitute a recommendation as to how any holder of shares of the Company’s common stock should vote with respect to the Merger or any other matter. Goldman Sachs Bank Europe SE’s opinion was approved by a fairness committee of Goldman Sachs Bank Europe SE and its affiliates.

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Goldman Sachs Bank Europe SE’s opinion is not, is not intended to be and should not be construed to be, a valuation report (Wertgutachten) of the type typically rendered by qualified auditors (Wirtschaftsprüfer) or independent valuation experts. Accordingly, Goldman Sachs Bank Europe SE’s opinion has not been prepared in accordance with the standards and guidelines for valuation reports prepared by qualified auditors as set by the German Institute of Public Auditors (Institut der Wirtschaftsprüfer in Deutschland e.V., IDW), which is referred to in this section as “IDW”. In particular, Goldman Sachs Bank Europe SE’s opinion has neither been prepared in accordance with the standards and guidelines set forth by the IDW for the preparation of a company valuation, commonly referred to as “IDW S 1”, nor the standards and guidelines set forth by the IDW for the preparation of a fairness opinion, commonly referred to as “IDW S 8”. An opinion like Goldman Sachs Bank Europe SE’s opinion as to whether a consideration is fair from a financial point of view differs in a number of important respects from a valuation report or a fairness opinion prepared by qualified auditors or independent valuation experts as well as from accounting valuations generally.

The following is a summary of the material financial analyses delivered by Goldman Sachs Bank Europe SE to Parent’s Executive Board and Parent’s Supervisory Board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs Bank Europe SE, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs Bank Europe SE. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs Bank Europe SE’s financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before November 6, 2020, the last completed trading day before the public announcement of the Merger, and is not necessarily indicative of current or future market conditions.

Historical Stock Trading Analysis.

Goldman Sachs Bank Europe SE analyzed, for reference only, the $44.50 in cash per share of the Company’s common stock to be paid by Parent pursuant to the Merger Agreement in relation to (i) the closing price per share of the Company’s common stock on January 30, 2020, (ii) the price per share of the Company’s common stock implied by (1) the average trading performance of PACCAR Inc. common stock and Volvo AB B-shares (such companies are referred to in this section as the “selected companies”) for the period from January 30, 2020 to November 6, 2020 and (2) the closing price per share of the Company’s common stock on January 30, 2020, (iii) the volume weighted average price, which is referred to in this section as “VWAP”, per share of the Company’s common stock for the 90-day trading period ended January 30, 2020, (iv) the highest closing price per share of the Company’s common stock for the 52-week period ended January 30, 2020 and (v) the average price per share of the Company’s common stock for the period from January 1, 2005 to November 6, 2020. Although neither of the selected companies is directly comparable to the Company, Goldman Sachs Bank Europe SE selected these companies because they are publicly traded companies that operate in the same sector as the Company with certain operations that for purposes of the analysis may be considered similar to certain operations of the Company.

This analysis indicated that $44.50 in cash per share of the Company’s common stock to be paid by Parent pursuant to the Merger Agreement represented:

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Illustrative Discounted Cash Flow Analysis of the Company (Standalone Case).

Using the Business Forecasts, Goldman Sachs Bank Europe SE performed an illustrative discounted cash flow analysis of the Company on a standalone basis. Using discount rates ranging from 8.0% to 9.0%, reflecting estimates of the Company’s weighted average cost of capital, Goldman Sachs Bank Europe SE discounted to present value as of July 31, 2020 (i) estimates of unlevered industrial free cash flow for the Company for the fourth quarter of 2020, and then annually through 2025, as reflected in the Business Forecasts, and (ii) a range of illustrative industrial terminal values for the Company. The terminal values were calculated by applying (i) perpetuity growth rates ranging from 1.0% to 2.0% to a terminal year estimate of industrial revenue to be generated by the Company as of October 31, 2025, (ii) industrial earnings before interest and taxes, which is referred to in this section as “Ind. EBIT”, margin of 6.0% and (iii) certain other terminal value estimates, each as provided by the management of Parent. The analysis implied multiples of industrial terminal value to last 12 months, which is referred to in this section as “LTM Ind. EBIT”, ranging from 8.8x to 11.8x. Goldman Sachs Bank Europe SE derived the discount rates by application of the Capital Asset Pricing Model, which is referred to in this section as “CAPM”, which requires certain company-specific inputs, including the Company’s target capital structure weightings, the cost of long-term debt, future applicable marginal cash tax rate and an equity beta for the Company, as well as certain financial metrics for the United States financial markets generally. The range of perpetuity growth rates was estimated by Goldman Sachs Bank Europe SE utilizing its professional judgment and experience, taking into account the Business Forecasts and market expectations regarding long-term real growth of gross domestic product and inflation. Goldman Sachs Bank Europe SE derived ranges of illustrative industrial enterprise values for the Company by adding the ranges of present values it derived above. Goldman Sachs Bank Europe SE then subtracted the amount of the Company’s industrial financial debt, industrial cash and cash equivalents and pension underfunding / Other Postemployment Benefits (“OPEB”) liabilities, each as of July 31, 2020, as well as the value of certain other Company enterprise value adjustments, each as provided by the management of Parent, from the range of illustrative industrial enterprise values it derived for the Company to derive a range of illustrative equity values for the Company. Goldman Sachs Bank Europe SE then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of the Company’s common stock to derive a range of illustrative present values per share of the Company’s common stock ranging from $24.00 to $42.00, rounded to the nearest dollar. Goldman Sachs Bank Europe SE calculated the number of fully diluted outstanding shares based on total outstanding equity instruments (including potentially dilutive securities) of 101,600,000, as provided by the management of Parent.

Illustrative Discounted Cash Flow Analysis of the Company (Including Synergies).

Using the Business Forecasts (including the Synergies), Goldman Sachs Bank Europe SE also performed an illustrative discounted cash flow analysis of the Company pro forma for the Merger. Using discount rates ranging from 8.0% to 9.0%, reflecting estimates of the Company’s pro forma weighted average cost of capital, Goldman Sachs Bank Europe SE discounted to present value as of July 31, 2020 (i) estimates of pro forma industrial unlevered free cash flow for the Company pro forma for the Merger for the fourth quarter of 2020, and then annually through 2025, as reflected in the Business Forecasts (including the Synergies), and (ii) a range of illustrative industrial terminal values for the Company pro forma for the Merger. The terminal values were calculated by applying (i) perpetuity growth rates ranging from 1.0% to 2.0% to a terminal year estimate of industrial revenue to be generated by the Company pro forma for the Merger as of October 31, 2025, (ii) Ind. EBIT margin of 8.0% (including the Synergies) and (iii) certain other terminal value estimates, each as provided by the management of Parent. The analysis implied multiples of industrial terminal value to LTM Ind. EBIT ranging from 7.1x to 9.5x. Goldman Sachs Bank Europe SE derived the discount rates by application of CAPM. The range of perpetuity growth rates was estimated by Goldman Sachs Bank Europe SE utilizing its professional judgment and experience, taking into account the Business Forecasts and market expectations regarding long-term real growth of gross domestic product and inflation. Goldman Sachs Bank Europe SE derived ranges of illustrative industrial enterprise values for the Company pro forma for the Merger by adding the ranges of present values it derived above. Goldman Sachs Bank Europe SE then subtracted the amount of the Company’s industrial financial debt, industrial cash and cash equivalents and pension underfunding / OPEB liabilities, each as of July 31, 2020, as well as the value of certain other Company enterprise value adjustments, each as provided by the management of Parent, from the range of illustrative industrial enterprise values it derived for the Company pro forma for the Merger to derive a range of illustrative equity values for the Company pro forma for the Merger. Goldman Sachs Bank Europe SE then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of the Company’s common stock to derive a range of illustrative present values per share of the Company’s common stock pro forma for the Merger ranging from $45.00 to $69.00 (including the Synergies), rounded to the nearest dollar. Goldman Sachs Bank Europe SE calculated the number of fully diluted outstanding shares based on total outstanding equity instruments (including potentially dilutive securities) of 101,600,000, as provided by the management of Parent.

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Public Market Premia Analysis.

Goldman Sachs Bank Europe SE reviewed and analyzed, using publicly available information, the acquisition premia for all-cash acquisition transactions announced during the time period from January 1, 2014 to November 6, 2020 involving targets that were public companies based in the United States and acquirers who held ownership in the targets of less than 50% prior to the transaction and increased such ownership to greater than 75% in connection with the transaction where the disclosed enterprise values for the transactions were greater than $250,000,000(for all deals) and greater than $2,500,000,000 (for large deals). For the entire period, using publicly available information, Goldman Sachs Bank Europe SE calculated the median, 1^st quartile, 3^rd quartile and average premia of the price paid in the transactions relative to the target’s stock price one month prior to announcement of the transaction. For all deals, this analysis indicated a median premium of approximately 32% across the period, a 1^st quartile premium of 19% and 3^rd quartile percentile premium of 50% across the period, and an average premium of 41% across the period. For large deals, this analysis indicated a median premium of approximately 31% across the period, a 1^st quartile premium of 18% and 3^rd quartile percentile premium of 48% across the period, and an average premium of 38% across the period. Using this analysis and Goldman Sachs Bank Europe SE’s professional judgment and experience, Goldman Sachs Bank Europe SE applied the low end of a reference range of illustrative premiums of 30% to 40% to the $28.20 price per share of the Company’s common stock implied by (1) the average trading performance of PACCAR Inc. common stock and Volvo AB B-shares during the time period from January 30, 2020 to November 6, 2020 (as further discussed above under “Historical Stock Trading Analysis”) and (2) the closing price per share of the Company’s common stock on January 30, 2020 of $24.07, and applied the high end of the reference range to the $29.37 volume-weighted average price per share of the Company’s common stock for the 90-day trading day period ended January 30, 2020 and calculated a range of illustrative implied equity values per share of the Company’s common stock of $37.00 to $41.00, rounded to the nearest dollar. January 30, 2020 was the last completed trading day prior to the public announcement of Parent’s initial offer to acquire all of the outstanding shares of the Company’s common stock not already owned by Parent.

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs Bank Europe SE’s opinion. In arriving at its fairness determination, Goldman Sachs Bank Europe SE considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs Bank Europe SE made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to Parent, the Company or the Merger.

Goldman Sachs Bank Europe SE prepared these analyses for purposes of Goldman Sachs Bank Europe SE’s providing its opinion to Parent’s Executive Board and Parent’s Supervisory Board as to the fairness from a financial point of view of the $44.50 in cash per share of the Company’s common stock to be paid by Parent pursuant to the Merger Agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Parent, the Company, Goldman Sachs Bank Europe SE or any other person assumes responsibility if future results are materially different from those forecast.

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The Merger Consideration was determined through arm’s-length negotiations between Parent and the Company and was approved by Parent’s Executive Board and Parent’s Supervisory Board. Goldman Sachs Bank Europe SE provided advice to Parent during these negotiations. Goldman Sachs Bank Europe SE did not, however, recommend any specific amount of consideration to Parent, Parent’s Executive Board or Parent’s Supervisory Board or that any specific amount of consideration constituted the only appropriate consideration for the Merger.

As described above, Goldman Sachs Bank Europe SE’s opinion to Parent’s Executive Board and Parent’s Supervisory Board was one of many factors taken into consideration by Parent’s Executive Board and Parent’s Supervisory Board in making their determination to approve the Merger. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs Bank Europe SE in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs Bank Europe SE attached as Annex H.

Goldman Sachs Bank Europe SE and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs Bank Europe SE and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of Parent, the Company, any of their respective affiliates and third parties, including Volkswagen AG, an affiliate of Parent, which is referred to in this section as “Volkswagen”, and any of its affiliates, and Icahn Enterprises G.P. Inc. and MHR Fund Management LLC, which is referred to in this section as “MHR”, each an affiliate of significant stockholders of the Company, and their respective affiliates and funds or other entities they manage and their respective portfolio companies, or any currency or commodity that may be involved in the Merger.

Goldman Sachs Bank Europe SE acted as financial advisor to Parent in connection with, and participated in certain of the negotiations leading to, the Merger. Goldman Sachs Bank Europe SE and its affiliates have provided certain financial advisory and/or underwriting services to the Company and/or its affiliates from time to time for which the Investment Banking Division of Goldman Sachs Bank Europe SE and its affiliates has received, and may receive, compensation, including having acted as bookrunner in connection with a public offering by the Company of its 9.500% Senior Secured Notes due 2025 (aggregate principal amount $600,000,000) in April 2020. During the two year period ended November 7, 2020, Goldman Sachs Bank Europe SE and its affiliates have recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to the Company and/or its affiliates of approximately $400,000. Further, Goldman Sachs Bank Europe SE and its affiliates have provided certain financial advisory and/or underwriting services to Volkswagen and/or its affiliates from time to time for which the Investment Banking Division of Goldman Sachs Bank Europe SE and its affiliates has received, and may receive, compensation, including having acted as joint global coordinator in connection with the initial public offering of 51,376,275 shares of common stock of Parent in July 2019; having acted as joint lead manager in connection with a public offering by Volkswagen International Finance NV, an affiliate of Volkswagen, of its Floating Rate Notes due 2024, 2.625% Notes due 2026, 3.250% Notes due 2030, 4.125% Notes due 2038, 3.375% Notes due 2026, and 4.125% Notes due 2031 (aggregate principal amount €4,250,000,000 and £800,000,000) in November 2018; as bookrunner in connection with a public offering by Volkswagen Bank GmbH, an affiliate of Volkswagen, of its 0.375% Senior Unsecured Notes due 2022 (aggregate principal amount €500,000,000) in June 2019; as financial advisor to Volkswagen in connection with the pending acquisition of 50% of Anhui Jianghuai Automobile Group Holdings Ltd. and 25% of JAC Volkswagen Automotive Co. Ltd. announced in February 2020; and as joint bookrunner in connection with a public offering by Volkswagen Group of America Finance LLC, an affiliate of Volkswagen, of 2.900% Unsecured Notes due 2022 (aggregate principal amount $1,500,000,000), 3,125% Unsecured Notes due 2023 (aggregate principal amount $1,000,000,000), 3,350% Unsecured Notes due 2025 (aggregate principal amount $1,000,000,000), and 3,750% Unsecured Notes due 2030 (aggregate principal amount $500,000,000) in May 2020. During the two year period ended November 7, 2020, Goldman Sachs Bank Europe SE has advised Parent and Volkswagen that Goldman Sachs Bank Europe SE and its affiliates have recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Parent, Volkswagen and/or Volkswagen’s affiliates, other than the Company as described separately above, of approximately $10,600,000. Goldman Sachs Bank Europe SE and its affiliates may also in the future provide financial advisory and/or underwriting services to Parent, Volkswagen, the Company, MHR, and their respective affiliates and, as applicable, portfolio companies, for which the Investment Banking Division of Goldman Sachs Bank Europe SE and its affiliates may receive compensation. Affiliates of Goldman Sachs Bank Europe SE and its affiliates also may have co-invested with affiliates of the Company and their respective affiliates from time to time and may have invested in limited partnership units of affiliates of the Company from time to time and may do so in the future.

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Parent’s Executive Board and Parent’s Supervisory Board selected Goldman Sachs Bank Europe SE as their financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Merger. Pursuant to a letter agreement dated April 21, 2020, as amended by the letter agreement, dated November 5, 2020, Parent engaged Goldman Sachs Bank Europe SE to act as its financial advisor in connection with the Merger. The engagement letter between Parent and Goldman Sachs Bank Europe SE provides for a transaction fee of €12,500,000, all of which is contingent upon consummation of the Merger. In addition, Parent has agreed to reimburse Goldman Sachs Bank Europe SE for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs Bank Europe SE against various liabilities, including certain liabilities under the federal securities laws.

A copy of Goldman Sachs Bank Europe SE’s written presentation made to Parent’s Executive Board and Parent’s Supervisory Board on November 7, 2020 has been attached as an exhibit to the Schedule 13E-3 filed with the SEC in connection with the Merger and will be available to any interested stockholder of the Company (or any representative of a stockholder who has been so designated in writing) to inspect and copy at the Company’s principal executive offices during regular business hours.

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THE MERGER

This discussion of the Merger is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement as Annex A. You should read the entire Merger Agreement carefully and in its entirety as it is the legal document that governs the Merger.

Structure of the Merger

The Merger Agreement provides that Merger Sub will merge with and into the Company. The Company will be the surviving corporation in the Merger. As a result of the Merger, the Company will cease to be a publicly traded company and will become a wholly owned indirect subsidiary of Parent. Other than the holder of the sole share of Series B Stock, you will not own any shares of the capital stock of the surviving corporation.

Merger Consideration

In the Merger, each outstanding share of our common stock will automatically be converted into the right to receive the Common Merger Consideration, without interest, other than shares of our common stock (i) owned by (x) Parent or any of its subsidiaries; or (y) the Company as treasury stock (x) and (y), which we refer to as “excluded shares”; and (ii) stockholders who have not voted in favor of the Merger and properly and validly perfected their statutory rights of appraisal in accordance with Section 262 of the DGCL, which we refer to as “dissenting shares”, which shares will be canceled without payment of any consideration therefor and will cease to exist. Each share of Series D Stock outstanding immediately prior to the Effective Time will be converted into an amount in cash, without interest, equal to the portion of the Common Merger Consideration that would have been payable in respect of such share of Series D Stock had such share converted into our common stock pursuant to the terms of the certificate of incorporation of the Company.

 

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Reasons for the Merger; Recommendation of the Company’s Board of Directors

The Board recommends that you vote “FOR” approval of the Merger Proposal.

The Board, at a meeting held on November 7, 2020, (i) determined that the Merger Agreement, the Voting Agreements, the Merger and the other transactions contemplated by the Merger Agreement are fair to and in the best interests of the Company and its stockholders; (ii) approved and declared advisable that the Company enter into the Merger Agreement; (iii) adopted the Merger Agreement, the Merger and the transactions contemplated by the Merger Agreement; (iv) directed that the Merger Agreement be submitted to our stockholders for consideration and adoption at the Annual Meeting; and (v) recommended that our stockholders vote to adopt the Merger Agreement and to approve and adopt such other matters that are submitted for their approval and/or adoption in connection with the Merger Agreement at the Annual Meeting. Approval of the Merger Proposal requires the affirmative vote of a majority of the outstanding shares of the Company’s common stock as of the close of business on the record date for the Annual Meeting.

In the course of reaching its determination and recommendation, the Board consulted with and received the advice and assistance of the Company’s outside legal and financial advisors and senior management at various times. See the sections entitled “The Merger—Background of the Merger” beginning on page 69 and “The Merger—Opinions of the Financial Advisors to the Company” beginning on page 88.

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Potential Positive Factors.

In recommending that stockholders vote in favor of adoption of the Merger Agreement, the Board considered a number of factors, including, among others, the following (which factors are not necessarily in order of relative importance) that the Board believes support its decision:

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Potential Negative Factors.

In the course of reaching its recommendation, the Board also considered a variety of risks and potentially negative factors concerning the Merger and the Merger Agreement, including the following (which factors are not necessary in order of relative importance) among others:

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The foregoing discussion of the information and factors considered by the Board is intended to be illustrative and not exhaustive, but includes the material factors considered by the Board. In reaching its determination and recommendation, the Board did not quantify, rank or assign any relative or specific weight to any of the foregoing factors, and individual members of the Board may have considered various factors differently. The Board did not undertake to make any specific determination as to whether any specific factor, or any particular aspect of any factor, supported or did not support its ultimate recommendation. Moreover, in considering the information and factors described above, each individual member of the Board applied his or her own personal business judgment to the process and may have given differing weights to differing factors. The Board based its recommendation on the totality of the information presented.

The explanation of the factors and reasoning set forth above contain forward-looking statements that should be read in conjunction with the section of this proxy statement entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Opinions of the Financial Advisors to the Company

The Company retained J.P. Morgan and PJT Partners as financial advisors to the Company in connection with the proposed Merger. In connection with the engagement, the Board requested that J.P. Morgan and PJT Partners evaluate the fairness, from a financial point of view, of the consideration to be paid in the Merger to holders of the Company’s common stock.

Opinion of J.P. Morgan Securities LLC

The following is a summary of J.P. Morgan’s opinion and the methodology that J.P. Morgan used to render its opinion.

Pursuant to an engagement letter dated April 17, 2020, the Company retained J.P. Morgan as its financial advisor in connection with the proposed Merger and to deliver a fairness opinion in connection with the proposed Merger.

At the meeting of the Board on November 7, 2020, J.P. Morgan rendered its oral opinion to the Board that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the Merger Consideration to be paid to the holders of the Company’s common stock in the proposed Merger was fair, from a financial point of view, to such stockholders. J.P. Morgan subsequently confirmed its November 7, 2020 oral opinion by delivering its written opinion to the Board, dated November 7, 2020.

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The full text of the written opinion of J.P. Morgan which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Annex E to this proxy statement and is incorporated herein by reference in its entirety. The Company’s stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the Board and in connection with and for the purposes of its evaluation of the proposed Merger, was directed only to the Merger Consideration and did not address any other aspect of the Merger. J.P. Morgan expressed no opinion as to the fairness of the Merger Consideration to the holders of any class of securities other than the holders of the Company’s common stock, creditors or other constituencies of the Company or as to the underlying decision by the Company to engage in the proposed Merger. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The summary of the opinion of J.P. Morgan set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion. The opinion does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote with respect to the proposed Merger or any other matter.

In arriving at its opinion, J.P. Morgan, among other things:

In addition, J.P. Morgan held discussions with certain members of the management of the Company with respect to certain aspects of the Merger, and the past and current business operations of the Company, the financial condition and future prospects and operations of the Company, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.

In giving its opinion, J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by the Board, the Company or otherwise reviewed by or for J.P. Morgan. J.P. Morgan did not independently verify any such information or its accuracy or completeness and, pursuant to its engagement letter with the Company, did not assume any obligation to undertake any such independent verification. J.P. Morgan did not conduct and was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of the Company or the Parent under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to J.P. Morgan or derived therefrom, J.P. Morgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of the Company to which such analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts or the assumptions on which they were based. J.P. Morgan also assumed that the Merger and the other transactions contemplated by the Merger Agreement will be consummated as described in the Merger Agreement, and that the definitive Merger Agreement and Voting Agreements would not differ in any material respects from the drafts thereof furnished to and reviewed by J.P. Morgan. J.P. Morgan also assumed that the representations and warranties made by the Company and Parent in the Merger Agreement and the related agreements are and will be true and correct in all respects material to its analysis. J.P. Morgan is not a legal, regulatory or tax expert and relied on the assessments made by advisors to the Company with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on the Company or on the contemplated benefits of the Merger.

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The projections furnished to J.P. Morgan for the Company were prepared by the Company’s management. The Company does not publicly disclose internal management projections of the type provided to J.P. Morgan in connection with J.P. Morgan’s analysis of the Merger, and such projections were not prepared with a view toward public disclosure. These projections were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of management, including, without limitation, factors related to general economic and competitive conditions and prevailing interest rates. Accordingly, actual results could vary significantly from those set forth in such projections. For more information regarding the use of projections, please refer to the section entitled “Certain Company Forecasts” beginning on page 97.

J.P. Morgan’s opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. J.P. Morgan’s opinion noted that subsequent developments may affect J.P. Morgan’s opinion, and that J.P. Morgan does not have any obligation to update, revise, or reaffirm such opinion. J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, of the consideration to be paid to the holders of the Company’s common stock in the proposed Merger, and J.P. Morgan has expressed no opinion as to the fairness of any consideration to the holders of any other class of securities, creditors or other constituencies of the Company or the underlying decision by the Company to engage in the Merger. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the proposed Merger, or any class of such persons relative to the Merger Consideration or with respect to the fairness of any such compensation.

J.P. Morgan was not authorized to and did not solicit any expressions of interest from any other parties with respect to the sale of all or any part of the Company or any alternative transaction.

The terms of the Merger Agreement, including the Merger Consideration, were determined through arm’s length negotiations among the Company, Parent, and Merger Sub and the decision to enter into the Merger Agreement was solely that of the Board. J.P. Morgan’s opinion and financial analyses were among many factors considered by the Board in its evaluation of the proposed Merger and should not be viewed as determinative of the views of the Board or management with respect to the proposed Merger or the Merger Consideration.

In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methodologies in rendering its opinion to the Board on November 7, 2020 and contained in the presentation delivered to the Board on such date in connection with the rendering of such opinion. The following is a summary of the material financial analyses utilized by J.P. Morgan in connection with rendering its opinion, as well as certain analyses utilized for reference purposes. The following summary, however, does not purport to be a complete description of the analyses or data presented by J.P. Morgan. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by J.P. Morgan, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of J.P. Morgan’s analyses.

Opinion of PJT Partners LP

The following is a summary of PJT Partners’ opinion and the methodology that PJT Partners used to render its opinion.

Pursuant to an engagement letter dated April 17, 2020, PJT Partners was retained by the Company to act as its financial advisor in connection with the proposed Merger and upon the Company’s request, to render its fairness opinion to the Board in connection therewith.

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At a meeting of the Board on November 7, 2020, PJT Partners rendered its oral opinion, subsequently confirmed in its written opinion dated November 7, 2020, that, as of the date thereof and based upon and subject to, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations of the review undertaken by PJT Partners in connection with the opinion (which are stated in its written opinion), the Merger Consideration to be received by the holders of Company common stock was fair to such holders from a financial point of view.

The full text of PJT Partners’ written opinion delivered to the Board, dated November 7, 2020, is attached as Annex F to this proxy statement and is incorporated herein by reference in its entirety. PJT Partners’ written opinion has been provided by PJT Partners at the request of the Board and is subject to, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations upon the review undertaken by PJT Partners in connection with the opinion (which are stated therein). You are encouraged to read the opinion carefully in its entirety. PJT Partners provided its opinion to the Board in its capacity as such, in connection with and for purposes of its evaluation of the Merger only and PJT Partners’ opinion does not constitute a recommendation as to any action the Board should take with respect to the Merger or how any holder of the Company common stock should vote or act with respect to the Merger or any other matter. The following is a summary of PJT Partners’ opinion and the methodology that PJT Partners used to render its opinion. The summary of the PJT Partners opinion contained in this proxy statement is qualified in its entirety by reference to the full text of PJT Partners’ written opinion.

In arriving at its opinion, PJT Partners, among other things: