CNH Global has rejected a buyout offer from its parent company, Fiat Industrial. A special committee of CNH Global unanimously concluded that Fiat’s proposal was inadequate.
“We have unanimously concluded that the proposal is inadequate and would not be in the best interests of CNH and its shareholders. The proposal requires the recommendation of the special committee, and the special committee has unanimously determined not to recommend the proposal,” CNH Global stated.
The special committee said it was open to evaluate any alternatives to this proposal, should Fiat Industrial do so. Fiat currently holds 88% of CNH Global, and had intended to acquire the remaining stake, valued at US$1.1bn.
Fiat, meanwhile, has asked its advisors to meet with the advisors to CNH Global’s special committee, to determine the basis for this decision. The advisors of both companies will also explore the possibility of reaching an agreement on revised terms for a merger transaction. This, however, will be on a basis broadly consistent with Fiat’s original proposal.
Fiat Industrial has stated that it will seek to reach an agreement in the next several weeks.
“Fiat Industrial remains committed to the strategic and financial benefits of the merger, which would simplify the group’s capital structure by creating a single class of liquid stock listed in New York and build a true peer in scale and in capital market position to the major North American-based global capital goods companies, enhancing the group’s appeal to international investors, improving the credit profile of both companies and providing an attractive platform for future growth opportunities,” said Fiat Industrial’s Chairman, Sergio Marchionne.
