By Gilles Castonguay
TURIN, Italy--Fiat Industrial SpA's (FI.MI) shareholders Tuesday
approved a proposal that brings the Italian truck and engine maker
a step closer to completing an operation begun more than a year ago
to create a single company with its U.S. unit, CNH Global NV
(CNH).
Nearly all of the shareholders attending an extraordinary
meeting in its home town in northwestern Italy voted in favor of a
proposal to merge the company with FI CBM Holdings NV, a vehicle
recently created to facilitate the merger with CNH.
Once their peers at CNH vote in favor of a similar proposal on
July 23, Fiat Industrial will merge with CNH to create CNH
Industrial, a company with a simpler structure focused on engines,
trucks and farm and construction machinery.
The vote by CNH shareholders will be a formality since they
agreed late last year to hand over their shares in favor of a
merger.
Under the terms of these two proposals, Fiat Industrial
shareholders will receive one share in CNH Industrial for every
Fiat Industrial share held, while those at CNH will get 3.828
shares for every share held.
The new company will be the third largest capital goods maker in
the world, and the second biggest maker of farming machinery after
Deere & Co. (DE).
By having its primary stock listing in New York, CNH Industrial
will also have greater access to debt and equity markets than Fiat
Industrial, which traded on the much smaller Milan market. CNH
Industrial will nevertheless have its secondary listing in
Milan.
Although it will be incorporated in the Netherlands, a request
has been made to have its fiscal residency in the U.K.
The merger has long been sought by Fiat Industrial's chairman,
Sergio Marchionne, who began the process in January 2011 by
spinning the company off from car maker Fiat SpA (F.MI).
Since Mr. Marchionne is also chief executive of Fiat and the car
maker shares Italian holding company Exor SpA (EXO.MI) as a major
shareholder with Fiat Industrial, analysts view the operation as a
blueprint for another merger in the works.
Fiat is preparing to take over U.S. partner Chrysler Group LLC.
It wants to buy the 41.5% stake it doesn't already own, but it
first must reach a deal on the price with the U.S. union trust that
owns it and find a way with its bankers to finance the
acquisition.
Mr. Marchionne told a news conference after the vote that he
would be chairman of CNH Industrial.
He said the new chief executive would be named by the end of the
third quarter.
Richard Tobin, the chief operating officer of Fiat Industrial
and chief executive of CNH, is to become chief operating
officer.
Write to Gilles Castonguay at gilles.castonguay@dowjones.com;
Twitter: @GRCastonguay
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