WARRENVILLE, Ill. – Navistar, maker of International trucks, says it has reached an agreement to acquire GM’s medium-duty truck business. The two companies have entered into a non-binding memorandum of understanding. Under the deal, Navistar will acquire certain assets, intellectual property and distribution rights for GM’s medium-duty product line.

Navistar, under the deal, will be able to manufacture GMC and Chevrolet-branded vehicles in the Class 4-8 GVWR range. Related parts and services businesses are also involved in the deal.

“The deal would leverage Navistar’s strengths in commercial trucks and engines, and advance its strategy to build scale and reduce costs,”the company said in a release.

Troy Clarke, president of GM North America, said,”Navistar’s expertise in building International brand commercial trucks and its track record in the medium-duty segment makes them an excellent choice to acquire and continue growing the business. We intend to work closely with Navistar to make this transition seamless to our dealers and customers.”

“This is another example of how we’re strategically growing our business for trucks, engines and parts, building scale and reducing costs,” added Daniel C. Ustian, chairman, president and CEO, Navistar International Corporation. “We are proud to incorporate the GM truck brands into our portfolio, and will utilize the scale to build on the success of both the International and GM product lines and their respective distribution networks.”

The deal is expected to close in 2008.