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 merger'

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 opportunities".

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.

Nil-premium proposal

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".