Truck-maker Fiat Industrial is considering sweetening the
terms of a plan to merge with CNH Global after directors at the farm equipment
group rejected the initial proposal as "inadequate".
A special committee of independent CNH board members,
including Oscar-winner and former New York deputy mayor Kenneth Lipper, on Monday
said that it had unanimously decided not to recommend that the maker of Case
and New Holland tractors accepts the tie-up.
The plans for a full merger with Fiat Industrial, which owns
88% of CNH, were "inadequate and would not be in the best interests of CNH and
its shareholders", the committee said.
The rejection leaves Italy's Fiat Industrial, the maker of
Iveco trucks, unable to implement a deal which would see the combined group
headquartered in the Netherlands, where CNH is based, and listed in New York.
'Committed to the
However, Fiat Industrial said that it had asked its advisors
to meet the special committee's bankers, from JP Morgan and Lazard, to
determine why the deal had been rejected, and see if a compromise proposal
could be sealed.
The talks will "explore whether the parties can reach
agreement on revised terms for a merger transaction", on a basis "broadly
consistent with that" of the original proposal, unveiled in May.
This meant ensuring "appropriate" credit ratings for the combined
group, the ability to "attract a wider range of international investors" and
creating "an appropriate platform from which to pursue future growth
Indeed, Sergio Marchionne, the Fiat Industrial chairman, said
that the group was "committed to the strategic and financial benefits of the
merger", including the single listing in New York.
Fiat Industrial is currently listed in Milan, where its
shares eased 0.5% to E7.795 in morning deals on Monday.
The terms of the original deal included the "intention" that
"that neither set of shareholders would receive a premium", with the tie-up
proceeding through a share swap done at ratios reflecting their prices in March
and April, before the merger idea was unveiled.
Fiat Industrial added on Monday that it "desires to move
forward with a transaction promptly and, accordingly, will seek to reach
agreement within the next several weeks".