By Tommaso Ebhardt and Siddharth Philip
October 15, 2012 — CNH Global NV (CNH) rejected a buyout offer from parent Fiat Industrial SpA (FI) in a blow to Chairman Sergio Marchionne’s plan to move the truck and tractor maker’s primary listing to New York from Milan, according to a Bloomberg report.
“We have unanimously concluded that the proposal is inadequate,” a CNH special committee evaluating the offer said in a statement today. Fiat Industrial, which owns 88% of CNH, had been seeking to buy the remaining stake — valued at $1.1 billion based on the stock’s latest closing price — as part of a proposal made in May.
Marchionne, who’s targeted 25 billion euros ($32 billion) in sales for Fiat Industrial this year, is seeking to create the world’s third-largest capital-goods company in the combination. The merged entity would have a product range spanning Iveco delivery trucks, New Holland harvesters and FPT ship engines.
“The news is negative as the deal is at risk,” Massimo Vecchio, a Mediobanca analyst in Milan, wrote today in a note to clients. “In the best case it will be significantly delayed and executed with worse terms.”
Fiat Industrial fell as much as 13 cents, or 1.7%, to 7.71 euros and was down 0.8% as of 9:32 a.m. in Milan trading, giving the company a market value of 9.5 billion euros. CNH rose 2% on October 12 to $40.26 in New York.
Moving Forward
Fiat Industrial proposed May 30 that a new company be created in a share exchange with no premium for CNH shareholders. A recommendation from the committee was a prerequisite for the deal, according to today’s statement. The CNH committee remains available to consider alternatives should Fiat Industrial amend its bid, it said. JPMorgan Chase & Co. (JPM) and Lazard Ltd. (LAZ) advised the committee.
The Italian manufacturer still wants to go ahead with the combination, it said today in a statement. Fiat Industrial has asked its advisors to meet with CNH to determine “the basis for this decision and explore whether the parties can reach agreement on revised terms for a merger transaction on a basis broadly consistent with the initial proposal,” it said.
Fiat Industrial “remains committed to the strategic and financial benefits of the merger,” Marchionne said today in the statement. Fiat Industrial said it aims to reach a new agreement with CNH within the next several weeks.
