CNH Receives Revised Offer from Fiat (CAT) (CNH) (DE)

CNH Global N.V.(CNH) recently announced that it has received a revised merger proposal from Fiat Industrial S.p.A. (FI).

Hence, 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 Pappalardo.

According to news source Reuters, Fiat Industrial has raised the merger offer by 25.6% for the remaining 12% stake.

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 merger proposal.

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. Thereafter, the merger will form a company worth nearly $13 billion and listed in the New York Stock Exchange and a secondary listing at The Netherlands.

As per the proposal, Fiat Industrial intends to ameliorate the state of affairs by conflating CNH Global with Fiat Industrial to create one unique firm, devoid of various complexities.

Fiat Industrial, which currently owns 88% of CNH Global, affirmed that the merger will not lead to attrition or hamper the ongoing operations of the company.

The company’s primary competitors include big players such as Caterpillar Inc. (CAT) and Deere & Company (DE). We believe the merger will be quite 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.