As farm and construction equipment manufacturer
CNH Global NV
) debuts on the New York Stock Exchange today, it is aiming for
an investment grade credit rating to attract more investors and
tap the U.S. credit markets for more funds. At the same time, the
company expects to lower its interest burden with easy access to
the credit markets. Moving forward, CNH Global aims to
judiciously use the money saved from lower interests to return
cash to shareholders in the form of dividends.
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In Nov 2012, Fiat Industrial, the parent company of CNH Global,
had inked a definitive agreement to merge its businesses with the
latter. The merged company was planned to be registered under the
laws of the Netherlands and listed on the New York Stock
Exchange. However, for corporate tax purpose, it would be based
in the U.K. as the region offers a lower corporate tax rate than
The strategic merger facilitated Fiat Industrial to shift its
base from Italy, which has been hit by four recessions since
2001. The successful integration of both the businesses fortified
the combined entity to compete at the highest level in the
capital-goods sector with adequate flexibility to pursue
inorganic growth at opportune times.
The combined company will focus more on the excavator segment as
CNH Global had ended its long-term alliance with Japanese company
Kobe Steel, Ltd. and group company Kobelco Construction Machinery
Co., Ltd. on Dec 31, 2012. Post-merger, the newly formed company
would be the world's third-largest capital-goods company with a
product line spanning from Iveco delivery trucks, New Holland
harvesters to FPT ship engines.
Fiat Industrial is a leading international auto manufacturing
company that designs, produces and sells vehicles for the mass
market under well-known brands such as Fiat, Alfa Romeo, Lancia,
Abarth, the Ferrari and Maserati. It also has a strategic
alliance with premier auto major, the Chrysler Group, to further
expand its geographic presence.
The merger of Fiat Industrial and CNH Global is likely to sow the
seeds of a similar endeavor and will serve as a "technical
blueprint" for a likely merger between the former and its
Chrysler division in the U.S.
Based in Amsterdam, CNH Global manufactures agricultural and
construction equipment. The company primarily sells and
distributes its products through its dealers and distributors
spread across 170 countries. On Nov 12, 1999, CNH Global was
formed following the merger of New Holland N.V. and Case
Corporation. The company has three operating segments -
Agricultural Equipment, Construction Equipment, and Financial
CNH Global presently has a Zacks Rank #3 (Hold). Other notable
companies in the industry include
) that retains a Zacks Rank #2 (Buy), and
Alamo Group, Inc.
), both carrying a Zacks Rank #1 (Strong Buy).