CNH Global N.V.
(CNH) recently responded positively to the increased merger
proposal from Fiat Industrial.
Two days ago, CNH received a revised merger proposal from Fiat
Industrial S.p.A. (FI). According to news source Reuters, Fiat
Industrial has raised the merger offer by 25.6% for the remaining
12% stake. Fiat Industrial already owns 88% of CNH
The company stated that the Special Committee of the Board of
Directors will consider the revised proposal in consultation with
its financial and legal advisors; J.P. Morgan and Lazard. The
legal advisors for the transaction are Cravath, Swaine &
Moore LLP, De Brauw Blackstone Westbroek N.V. and Bonelli Erede
The Special Committee is in favour of the increased offer from
Fiat Industrial regarding the proposed strategic merger with CNH
and has directed its advisors to work with Fiat to execute the
transaction based on the revised offer.
The merger proposal was put forward by Fiat Industrial in May
this year with an objective of creating a single company with a
single trading stock.
In July, CNH Global formed a special committee of independent
directors, including Thomas J. Colligan, Edward A. Hiler, Rolf M.
Jeker, Kenneth Lipper and Jacques Theurillat, to evaluate the
Consequently, the merger of CNH and Fiat will result in the
formation of a new company in the Netherlands. The shareholders
of CNH Global would receive 3.82 shares of the new company for
each CNH share while FI shareholders would receive one share of
new company share for each FI share held. The shareholders of CNH
will also be paid a $10 cash dividend per CNH share before the
Fiat Industrial had earlier affirmed that the merger will not
lead to any attrition or hamper the ongoing operations of the
The company's primary competitors include big players such as
Deere & Company
). We believe the merger will be a profitable venture as both
companies sustain a formidable position in the industries where
they operate. Further, the merger will unite their strengths and
elevate their position in the global economy.
We maintain a Neutral recommendation on CNH GLOBAL NV. Our
recommendation is supported by a Zacks #3 Rank, which translates
into a short-term rating of Hold.
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