(By Balachander) Navistar International Corp. (NYSE:NAV) agreed to appoint three new members to its board, thus averting a proxy war with activist investor Carl Icahn.
The truck and engine maker said Vincent Intrieri, a nominee of Icahn, and Mark Rachesky has been named to the board. The company agreed to add a third director, who will be designated and mutually agreed upon by by Icahn and Rachesky.
All three nominees will replace current board members Eugenio Clariond, Steven Klinger and an existing Navistar director, with the board's size still at 10 members.
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The appointment of the new directors come under an agreement Navistar has entered into with each of Icahn (NASDAQ:IEP) and Rachesky's MHR Fund Management LLC.
As per the terms of the agreements, Icahn and MHR have agreed that they will not run a proxy contest at the 2013 annual meeting and will support the Board's nominees, as well as certain other provisions.
"I am glad to have reached an agreement that provides strong shareholder representation on the Board and look forward to working diligently with the Board to enhance value at Navistar," Icahn said.
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Icahn, who holds 14.9 percent of Navistar, had called for changes in the company and demanded four seats on the board. MHR also owns roughly 15 percent of Navistar.
Navistar, which is struggling to meet current U.S. emission rules for its new heavy-duty truck engine, had in August said it was taking actions, including reduction of jobs, to cut costs. It also withdrew its fiscal 2012 guidance.
Last month, the company posted a sharply lower quarterly profit as a hefty income tax benefit boosted results in the year-ago period. Navistar's truck segment posted a loss of $30 million amid "deteriorating" industry volumes, the company said. Its engine segment also recorded a loss of $47 million due to lower sales volumes in South America, resulting from a pre-buy of pre-Euro V emissions engines in the third quarter of 2011.
The stock, which has been trading in the 52-week range of $19.79 to $48.18, climbed 6.84 percent to trade at $22.66 on Monday.