Volkswagen Group’s truck unit Traton SE has finalized its deal with Navistar International, agreeing to pay about $3.7 billion for the U.S. truck maker’s outstanding shares.

The merger agreement makes Traton the owner of Navistar’s outstanding common shares. Prior to the deal, the VW Group subsidiary already held a 16.7 per cent stake in Navistar, which means the U.S. company has now been valued as a whole at around $4.4 billion.

In order to fund the deal, the Volkswagen Group will give Traton a loan of €3.3 billion, the equivalent of $3.89 billion at the current exchange rates. The loan is repayable over 12-18 months.

Read Also: U.S. Truckmaker Navistar International Accepts New Merger Offer From VW Group’s Traton

Navistar LT Series

The acquisition of the Illinois-based maker of trucks and buses extends Volkswagen Group’s reach in North America, effectively turning Traton Group into a global player. Navistar will join the MAN, Scania and Volkswagen Caminhões e Ônibus (Volkswagen Trucks and Buses) brands.

Traton says the deal will allow it to combine its strong position in Europe and substantial presence in South America with Navistar’s complementary footprint in North America “to create a global company well-positioned to benefit from enhanced brand performance, increased innovation and industry-leading capabilities.”

This merger follows recent trends in the truck industry, with companies looking to share the costs of developing low emissions technology.

Navistar LT Series

“Today’s announcement accelerates our Global Champion Strategy by expanding our reach across key truck markets worldwide, including scale and capabilities to deliver cutting-edge products, technologies and services to our customers,” said Traton CEO Matthias Gründler. “Together, we will have an enhanced ability to meet the demands of new regulations and rapidly developing technologies in connectivity, propulsion and autonomous driving for customers around the world.”

Navistar International said its major shareholders, including Icahn Capital LP and MHR Fund Management LLC, have agreed to vote in favor of the deal.

“This transaction builds upon our highly collaborative and successful strategic alliance and further enhances the growth trajectory of the combined company, while delivering immediate and substantial value to our shareholders,” said Navistar President and CEO Persio Lisboa. “We look forward to continuing to work with the TRATON team to create opportunities for our employees and provide an outstanding experience for our customers and dealers through best-in-class products, services and technologies.”