International farm and construction equipment manufacturer CNH, itself formed from the merger of Case IH, New Holland and Steyr, is poised to merge with its majority owner in a new, yet-to-be-named company.
Fiat Industrial, which spun off last year from automaker Fiat and is the 88 per cent majority owner of CNH Global, on Monday announced it will merge with CNH into a new company.
Chicago-based CNH was created in 1999 from the merger of Case Corp. and New Holland, and operates a Canadian ag equipment division in Saskatoon, created when it bought seeding equipment maker Flexi-Coil in 2000.
Fiat Industrial shareholders would swap their shares one-for-one for shares in the new company, while CNH shareholders would get 3.828 shares in the new entity for each CNH share in the merger.
The merger, expected to close in the second quarter of 2013, is subject to approval from shareholders of both companies. Fiat Industrial has effectively already agreed to vote its CNH shares in favour of the merger, when CNH’s shareholders meet to consider the deal.
"Completion of this merger will bring to a conclusion a lengthy process of simplifying and rationalizing the group’s equity capital structure, and allow shareholders in both companies the opportunity to participate in the growth prospects of the world’s third-largest capital goods provider," Sergio Marchionne, chairman of Fiat Industrial, said in a release.
"This appeal will be further enhanced through the loyalty share structure intended to reward long-term stable shareholders that share our goal of enhancing shareholder value over the long term, as well as through enhanced flexibility to pursue strategic opportunities."
Under the loyalty structure, shareholders who continue to hold their shares until completion of the merger could elect to receive common shares registered in a "special segment" of the new company’s share register and be entitled to two votes per share. Shareholders who choose to do so "will be entitled to retain double-vote shares indefinitely."
Turin-based Fiat Industrial’s other holdings include 100 per cent ownership of powertrain manufacturer FPT Industrial, and of commercial/industrial truck and vehicle maker Iveco.
The new company’s shares are to be listed on the New York Stock Exchange, where CNH’s shares now trade. The new company would also use its "reasonable best efforts" to get listed on Italy’s Mercato Telematico Azionario.
CNH joins new spinoff from automaker Fiat, Jan. 6, 2011