Fiat Industrial plans merger with CNH Global

FIAT INDUSTRIAL, the truck and tractor manufacturer that carmaker Fiat SpA spun off in 2011, plans to merge with its CNH Global unit and move its primary listing to New York to lure more investors worldwide.

Fiat Industrial, which controls the tractor maker through an 88 per cent stake, proposed to CNH’s board the creation of a new company in a share exchange that would not include a premium for either companies’ investors, the Turin, Italy-based company said. The transaction would create the world’s third-largest capital goods company, according to Fiat Industrial, with a product range that includes Iveco delivery trucks, New Holland harvesters and FPT ship engines. Fiat Industrial chairman Sergio Marchionne targets €25 billion in sales this year, including Amsterdam-based CNH. Marchionne has been looking for a way to buy out minority CNH shareholders, who currently own a stake worth $1.15 billion.

He said last month that Fiat Industrial was working on a solution after the parent company simplified its capital structure by converting its saving and preferred shares into common stock. Marchionne said in a letter to employees today that while Fiat Industrial’s name may change as part of the transaction, the “operational structure will not.”

The new structure would create a single class of stock listed in New York with a secondary listing in Europe, the Italian manufacturer said. CNH is listed in New York, while Fiat Industrial shares are traded in Milan. Fiat Industrial will be delisted from the Milan exchange on completion of the deal, according to two people familiar with the matter.

A decision hasn’t yet been made on where to list in Europe, and the Milan exchange remains one of the possibilities, said the people, who declined to be identified discussing the private plan. “With the crisis in Europe and an Italian exchange not very liquid, it’s obvious that a global player with a strong presence in the US would seek a New York listing,” said Giuliano Noci, associate dean at MIP Politecnico in Milan.

Fiat, which owns 58.5 per cent of US auto manufacturer Chrysler Group, aims to merge the two carmakers to boost revenue to more than €100 billion in 2014. – (Bloomberg)