CNH Rejects Fiat Merger Offer

Posted on October 15, 2012

CNH Global has rejected a proposed merger with Italy's Fiat Industrial (FI) that was intended to create a single U.S.-listed company that could benefit from lower financing costs and other synergies that would better position it to compete in farm and construction equipment markets globally.

While Fiat Industrial already controls 88% of CNH, approval from the Special Committee of the CNH board of directors is required for the merger to occur. In a statement, the CNH said that in consultation with its financial and legal advisors, it had "carefully evaluated Fiat Industrial S.p.A.'s proposal" and that "based on the information made available to us, as well as the opinions of our financial advisors, J.P. Morgan Securities LLC and Lazard, we have unanimously concluded that the proposal is inadequate and would not be in the best interests of CNH and its shareholders."

CNH left the door open however by adding that "the Special Committee remains available to evaluate any alternatives to the Proposal should FI elect to advance any such alternatives."

Fiat Chairman Sergio Marchionne said that "Fiat Industrial remains committed to the strategic and financial benefits of the merger."

Fiat Industrial said it has asked its advisors to meet CNH's special committee to "explore whether the parties can reach agreement on revised terms for a merger transaction on a basis broadly consistent with that of the proposal."