John Deere, watch outa new rival is getting ready to roll up.
Fiat Industrial announced Monday that it is poised to buy the 12 percent of agricultural and construction equipment maker CNH Globalworth roughly $1.5 billionthat it doesn’t already own on the way to creating a yet-to-be-named company valued at $13 billion.
The move is the final step in a multiyear process Fiat launched to create a stand-alone capital goods business. In 2011, the Italian luxury carmaker finished spinning off Fiat Industrial in what it said was an attempt to more accurately value both businesses in their respective markets.
At the time, the new Fiat spin-off already owned a majority stake in CNH Global, the product of a 1999 merger between Case and New Holland that is headquartered in Illinois, trades on the New York Stock Exchange, and is incorporated in the Netherlands. Under the terms of the deal announced Monday, the new entity will continue to have a Dutch structure and will be traded in the United States. The company hopes to have a secondary listing in Italy, where Fiat Industrial currently trades.
In a statement announcing the deal, Fiat Industrial chairman Sergio Marchionne, who also leads the rest of Fiat, said the merger concludes “a lengthy process of simplifying and rationalizing the [company's] equity capital structure.”
A bevy of law firms played a role in the transaction. Sullivan & Cromwell, Freshfields Bruckhaus Deringer, and Italian firm Legance Studio Legale Associato advised Fiat. A special committee of the CNH Board, which negotiated the deal’s terms for CNH, turned to Cravath, Swaine & Moore, Dutch firm DeBrauw Blackstone Westbroek, and Italian firm Bonelli Erede Pappalardo. Latham & Watkins also advised CNH.
When the two companies combine, Fiat Industrial shareholders will receive one share of the new company for each of their existing Fiat Industrial shares. CNH shareholders, meanwhile, will get 3.828 shares of the new company for each of their CNH shares. Each CNH minority shareholder will also get a $10-per-share cash dividend expected to be paid by year-end, though the deal isn’t set to close until the second quarter of 2013.
Sullivan & Cromwell partner Scott Miller, who is leading the CNH deal team, brought Fiat work to the firm in 2004 when the carmaker installed Marchionne as its new leader. A New York and Palo Altobased M&A lawyer, Miller had a working relationship with Marchionne dating to the latter’s tenure with his previous company, Swiss aluminum business Algroup. In 2005, Miller helped Fiat terminate an alliance with General Motors, which earned the Italian automaker a $2 billion payment. In 2009 he advised the company on a new alliance, with Chrysler, that saw Fiat provide Chrysler with access to its small-car technology and entree to the Latin American and European auto markets in exchange for a stake in the soon-to-be-bankrupt automaker and access to the American car market (that assignment earned Miller a Dealmaker of the Week nod from this publication). He later advised on the industrial brand spin-off, which was announced in April 2010.
The Sullivan & Cromwell lawyers working alongside Miller on the CNH deal include European counsel Oderisio de Vito Piscicelli in London and tax lawyers Davis Wang, who is special counsel in New York; Michael McGowan, a partner in London; and Andrew Solomon, a partner in London.
On the other side of the deal, Cravath M&A partners Richard Hall, Mark Greene, and Minh Van Ngo worked with tax partners Stephen Gordon and Lauren Angelilli; executive compensation and benefits partner Eric Hilfers; and litigation partner Robert Baron on litigation matters. Latham partners on the deal include Mark Gerstein, the firm’s Chicago-based M&A chair, as well as partner Jeffrey Lawlis in Milan and Alexander Cohen in Washington, D.C.
Attorneys for Freshfields, Legance, De Brauw, and Bonelli were not immediately available.