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Volkswagen AG’s board is preparing to sign off on its heavy-truck unit Traton SE acquiring U.S. manufacturer Navistar International Corp., according to people familiar with the matter.

Volkswagen AG and Toyota Motor Corp.’s truck subsidiaries are joining forces on battery-electric and fuel cell vehicles, enabling the companies to split the costs of developing technology needed to comply with stricter emission rules.

Navistar International Corp. is on the verge of becoming a subsidiary of German truck maker Traton SE, a step analysts said is a positive development for both companies.

Volkswagen AG’s heavy-truck division set a deadline for Navistar International Corp. to accept its takeover bid, ratcheting up pressure on the U.S. manufacturer to decide on a $3.6 billion deal.

Volkswagen AG’s Traton truck-making division echoed competitors in warning it’s “intensively” preparing for a much more difficult environment next year.

Volkswagen AG raised 1.55 billion euros ($1.8 billion) selling a stake in its truck business, but only after pricing the offer at the low end of a target range to attract investors to one of Europe’s biggest initial public offerings this year.