CHICAGO Fiat Industrial SpA, which manufactures agricultural and construction equipment, trucks and commercial vehicles, has entered into a merger agreement with CNH Global NV, which also manufactures a wide range of agricultural and construction equipment.
"Completion of this merger will ... allow shareholders in both companies the opportunity to participate in the growth prospects of the worlds third-largest capital goods provider, which will be a true peer in scale and capital markets appeal to the other major global capital goods companies," Fiat chairman Sergio Marchionne said in a statement Monday.
Under the terms of the agreement, Fiat Industrial and CNH will merge into a newly formed company, NewCo, organized under Dutch law. Fiat Industrial shareholders will receive one NewCo share for each Fiat Industrial share; CNH shareholders will receive 3.828 NewCo shares for each CNH share.
In addition, CNH will pay a cash dividend of $10 per share to CNH minority shareholdersFiat Industrial is an 88-percent shareholderbefore closing the merger. The dividend and the 3.828 NewCo common shares for each CNH share represent a 25.6-percent premium over the implied value of Fiat Industrials initial offer.
Created in 1999 by the merger of New Holland NV and Case Corp., CNH now comprises the heritage of three agricultural brands (Case IH, New Holland AG and Steyr) and three construction equipment brands (Case Construction Equipment, New Holland Construction and Kobelco). The company employs 30,000 people at 37 manufacturing facilities throughout Europe, North America, Latin America and Asia. CNH reported sales of $14.5 billion through the first nine months of 2012, a 9-percent improvement from $13.3 billion in the same period last year.
Fiat Industrial employs nearly 67,000 people at 64 plants primarily in Europe, North America and South America. Fiat recorded sales of 18.8 billion ($24.36 billion) in the first nine months of 2012, up 7.4 percent from nearly 17.5 billion a year earlier.
The merger, which is subject to approval by the shareholders of both companies, is expected to close during the second quarter of 2013.