Following last month’s decision by CNH’s Board of Directors Special Committee not to recommend Fiat Industrial’s (FI) initial strategic combination bid, FI has engaged in further discussions with the Special Committee regarding its willingness to offer improved terms.
A final offer letter from Sergio Marchionne, chairman of FI, to the CNH Special Committee is said to preserve the essential components of the original FI offer of May 30, 2012 which proposed the merger of each of FI and CNH into a newly-formed company in the Netherlands (“NewCo”), in which CNH shareholders would receive 3.828 NewCo shares for each CNH share, and FI shareholders would receive one NewCo share for each FI share. Improving upon its initial offer, FI’s final offer contemplates adding a substantial cash dividend of US$10 per CNH share to be paid to CNH shareholders prior to the merger and, if practicable, prior to the end of this year, providing them with an “accelerated realisation of a significant portion of the value in the transaction”. FI has indicated its willingness to defer receipt of the dividend on its 88% of the CNH shares in order to preserve the Group’s capital pending completion of the merger. Adding such a special dividend to Fiat Industrial’s May 30 proposal is said to represent a 25.6% improvement over the implied value of the original proposal, plus the value associated with an accelerated distribution.
FI said it would withdraw its best and final offer unless the CNH Special Committee advises FI by 11.59pm (Eastern Standard Time) on Wednesday, 21 November, 2012 that it is prepared to recommend all terms of FI’s final offer and enters a definitive merger agreement by Sunday, November 25, 2012.
If this best and final offer is not accepted, FI said it intended to proceed with the other aspects of the proposed transaction, including the merger of FI with a newly formed company incorporated in the Netherlands with shares listed in New York and Milan. This merger, as well as other steps that FI has discussed with the Special Committee and intends to take, are said by the company to “preserve for FI shareholders most of the expected benefits of the proposed strategic combination with CNH”.
