FRANKFURT -- Volkswagen Group will take a 19.9 percent stake in U.S.-based Navistar International for around $16 per share as part of a partnership deal, a person familiar with the matter said on Monday.
VW's commercial vehicles division is trying to build itself into a global truck manufacturer having absorbed Germany's MAN and Sweden's Scania. Navistar is looking for a technology partner to build engines that can meet tightening emissions rules.
Navistar is seen as an attractive target for VW because it has a large North American dealer network, something the German automaker lacks. Andreas Renschler, head of Volkswagen commercial vehicles, has wanted to get a strategic foothold in North America as a way to challenge Daimler, his former employer.
The deal will be announced as soon as Tuesday, sources said.
Volkswagen declined to comment, while Navistar was not immediately available for comment.
Navistar has a market value of around $1.15 billion and has been on the lookout for an engine partner since 2010 when it failed to get approval from the U.S. Environmental Protection Agency for its heavy-duty diesel truck engine.
VW has agreed to supply engines to Navistar in exchange for a stake in the truckmaker, one source told Reuters.