LONDON â€" The agricultural and construction equipment company CNH on Monday rejected a proposed merger with its Italian majority shareholder Fiat Industrial.
The Italian company already owns an 88 percent stake in CNH, and had proposed earlier this year to buy the remaining shares in the U.S. company in a share swap that would give CNH investors around 4 shares in Fiat Industrial for each CNH share.
Fiat Industrial, which manufactures capital goods like trucks and commercial vehicles, had hoped that the deal would allow the Italian company to obtain a U.S. listing.
The Italian company had said it would not offer a premium to acquire CNH's outstanding shares, which have risen less than 1 percent since the merger was first proposed in late May, because the deal would not result in cost savings.
The proposed deal is dependent on CNH's board agreeing to the merger, but the U.S. company said on Monday that the proposal would not be in the best interest of the company's shareholders.
“We have unanimously concluded that the proposal is inadequate,†the Chicago-based company said in a statement.
In response, the Italian company, which was spun out from the automaker Fiat, said it would meet with CNH to determine whether both sides could reach an agreement.
Fiat Industrial “remains committed to the strategic and financial benefits of the merger, which would simplify the group's capital structure by creating a single class of liquid stock listed in New York,†the company's chairman, Sergio Marchionne, said in a statement.
