Potential Combination of Fiat IndustrialPotential Combination of Fiat Industrial and CNH
Analyst & Media CallAnalyst & Media CallMay 30th, 2012
20 Novembre, 2010
Safe harbor statementSafe harbor statementCertain information included in this document is forward
looking and is subject to important risks and uncertainties
that could cause actual results to differ materially. The
issues, agriculture, the environment, trade and commerce and
infrastructure development; actions of competitors in the
various industries in which the Group competes; production
Company's businesses include its capital goods business,
including trucks, commercial vehicles, agricultural equipment,
heavy and light construction equipment, powertrains for the
capital goods and marine business, related service parts and
difficulties, including capacity and supply constraints and
excess inventory levels; labour relations; interest rates and
currency exchange rates; political and civil unrest; and other
risks and uncertainties. Any forward-looking statements
financial services and its outlook is predominantly based on
its interpretation of what it considers to be the key economic
factors affecting these businesses. Forward-looking
statements involve a number of important factors that are
contained in this document are referred to the current date
and, therefore, any of the assumptions underlying this
document or any of the circumstances or data mentioned in
this document may change. Fiat Industrial S.p.A. expressly
subject to change, including: statements regarding the
potential benefits of, and intentions regarding, the proposed
transaction; the many interrelated factors that affect
consumer confidence and worldwide demand for capital
disclaims and does not assume any liability in connection with
any inaccuracies in any of these forward-looking statements
or in connection with any use by any third party of such
forward-looking statements. This document does not
goods and capital goods -related products; factors affecting
the agricultural business including commodities prices,
weather, floods, earthquakes or other natural disasters, and
governmental farm programs; general economic conditions in
represent investment advice or a recommendation for the
purchase or sale of financial products and/or of any kind of
financial services. Finally, this document does not represent
an investment solicitation in Italy, pursuant to Section 1, letter
May 30th, 2012Potential Combination of Fiat Industrial and CNH 2
each of the Group's markets; changes in governmental
policies regarding banking, monetary and fiscal policies,
legislation, particularly that relating capital goods-related
(t) of Legislative Decree no. 58 of February 24, 1998, or in
any other country or state.
A global leader in the capital goods sector
Global top 3 capital goods platformEEQUIPMENTQUIPMENT SSALESALES –– 20112011(1)(1)(€/BN)
A global leader in the capital goods sector
G oba top 3 cap ta goods p at o
Global top 2 in agricultural equipment
Global top 3 in commercial vehicles(2)
Global top tier in construction equipment
Leading powertrain technology with
substantial global scale in medium and heavy g y
diesel engines
Top player in commercial vehicles and heavy
machinery in Brazil
Well positioned for growth in China, Russia
and India
0 10 20 30 40 50
May 30th, 2012Potential Combination of Fiat Industrial and CNH 3
Source: Companies’ annual reports (converted to Euro if required)
(1) Fiat Industrial revenues adjusted to exclude Financial Services(2) Global units sold including China JVs
0 10 20 30 40 50
Broad presence and uniquely diversified business modelbusiness model
RoW,
GROUP REVENUES BY GEOGRAPHYFY 2011: €24.3BN
FY 2011 INDUSTRIAL OPERATIONSREVENUES BY BUSINESS
CNH AG IvecoCNH CE
€9.4bnEurope,
43%Latin
America, 17%
RoW, 15%
€2.8bn€10.2bn
North America,
25%
Europe, 26%
RoW, 12%
GROUP TRADING PROFIT BY GEOGRAPHYFY 2011: €1.7BN
26%Latin
America, 17%
FPT INDUSTRIAL
€3.2bn
May 30th, 2012Potential Combination of Fiat Industrial and CNH 4
North America,
45%
FPT INDUSTRIAL
Global industrial footprint (excl. JVs)
Fiat Industrial Worldwide (FY ’10)NN AA 16 4%16 4%EEUROPEUROPE ** 34.1%34.1%
Global industrial footprint (excl. JVs)
Fiat Industrial Worldwide (FY 10)WW Industrial presence and employees
NNORTHORTH AAMERICAMERICA 16.4%16.4%
IITALYTALY 27.8%27.8%
MMERCOSURERCOSUR 14 4%14 4%
EMPLOYEESEMPLOYEES((TOTALTOTAL: ~67: ~67KK))
R&D CR&D C
MMERCOSURERCOSUR 14.4%14.4%RRESTEST OFOF WWORLDORLD 7.3%7.3%
PLANTSPLANTS((TOTALTOTAL: 64): 64)
R&D CR&D CENTERSENTERS((TOTALTOTAL: 51): 51)
NNORTHORTHAAMERICAMERICA 1010 EEUROPEUROPE ** 2424 NNORTHORTH
AAMERICAMERICA 1313EEUROPEUROPE ** 1919
MMERCOSURERCOSUR 88
IITALYTALY 1414
RRESTEST OFOFWWORLDORLD 88
MMERCOSURERCOSUR 44
IITALYTALY 1111
RRESTEST OFOFWWORLDORLD 44
May 30th, 2012Potential Combination of Fiat Industrial and CNH 5
Note: Data as of 31 December 2011(*) Europe excluding Italy
WWORLDORLD 88
Current FI group structureCurrent FI group structure
FIAT INDUSTRIAL• Market Cap1: €9.6bn• Incorporated in Italy• Listed in MilanS.P.A. • Listed in Milan• Reports in EUR/IFRS
Fiat Netherlands Holding N.V.
100%
• Incorporated in the Netherlands
IvecoCNH Global N.V.
~88%
FPT Industrial
100% 100%
• Market Cap2: $10.0bn (€8.0bn)
• Public float (NYSE) ~12%• Incorporated in the
Netherlands
Source: Bloomberg. Market prices as of 29-May-2012. EUR / USD exchange rate of 1.25
• Listed on the NYSE• Reports in USD/US GAAP
May 30th, 2012Potential Combination of Fiat Industrial and CNH 6
g p f y / g f
(1) Assumes 1,222.6m NOSH and share price of €7.89 (2) Treasury stock method applied, share price of $41.25
Assessment of the current situation
• The existence of two distinct equity securities for FI and CNH listed on
Assessment of the current situation
separate markets is the result of a series of transactions pursued in the
past by FIAT Group
• The current situation is cumbersome and inefficient in several respects Small public float and liquidity of CNH
Constrains the Group’s valuation Limits ability by top US capital goods investors to build meaningful positions in CNH Creates holding company discount at FI group level
Limits the Group’s ability to capture strategic opportunities using equity Multiple jurisdictions and layers of governance complicate intra-group dealingsMultiple jurisdictions and layers of governance complicate intra group dealings
• These issues have been magnified following the demerger because of the
greater prominence of CNH within FI Group
May 30th, 2012Potential Combination of Fiat Industrial and CNH 7
greater prominence of CNH within FI Group
FI and CNH trading at a significant discount vs. peersvs. peers
2012E EV/EBITDA T2012E EV/EBITDA TRADINGRADING MMULTIPLESULTIPLES
6.4 x6.1 x
4.9 x 4 9 x 4 8 x
6.3 x 6.1 x
5.1 x
4.3 x
3.2 x
4.9 x 4.9 x 4.8 x
FI CNH Scania MAN Volvo Navistar Paccar Deere CAT AGCO
May 30th, 2012Potential Combination of Fiat Industrial and CNH 8
Source: Companies’ latest filings, presentations and websites; IBES Estimates; Bloomberg. Market prices as of 29-May-2012
Note: EV calculated as Market Cap + Industrial Net Debt + Pension Liabilities + Minority Interest - Associates/JVs - Book Value of Financial Services Subsidiaries
CNH has the smallest float and absolute liquidity within peer group
LIQUIDITY VS. FREE-FLOAT ANALYSIS
MARKET CAP (€BN) 12 MONTH ADTV1 (€M) FREE FLOAT (% OF S/O)
liquidity within peer group
€9.6bn
€8.0bn
€18 9b
67%
12%
~85%
51
13
111
Euro
pean
Pe
ers
€18.9bn
€12.0bn
€10.5bn
~85%
~44%
~37%
111
51
22
Peer
s
€49.7bn
€24.8bn
€11.1bn
~100%
~100%
~93%
603
264
97
US
P
€3.2bn
€1.6bn
~100%
~100%
56
47
May 30th, 2012Potential Combination of Fiat Industrial and CNH 9
Source: Bloomberg. Market prices as of 29-May-2012. EUR / USD exchange rate of 1.25Note: Market cap calculated applying treasury stock method(1) Average Daily Trading Volume
Summary of the proposed transactionSummary of the proposed transaction
TransactionStructure
• FI and CNH to combine into a new Dutch holding company or adopt a similar structure (“NewCo”)• Exchange ratio to be established at market based on undisturbed market prices
March/April 2012, before possible transaction was first raised publicly1
• No cash offer for CNH shares
Hi-Low Voting
• Loyalty voting structure to promote core base of long-term shareholders• Shareholders who vote (regardless of how) at EGMs and continue to hold shares until closing may
elect for two votes per share Shareholders may retain double vote shares indefinitely but upon transfer revert to single vote2
Structure Shareholders may retain double vote shares indefinitely, but upon transfer revert to single vote• After the closing, new shareholders with single vote shares may earn a double vote by holding
shares for three years
Listing• Primary listing on the NYSE• Secondary listing on European exchange
3Secondary listing on European exchange
Stakeholder Rights
• Transaction will trigger withdrawal rights for dissenting FI shareholders as a consequence of the redomiciling from Italy to the Netherlands Price equal to 6 months average prior to the publication of the notice of call of the FI EGM
• No statutory withdrawal rights for CNH shareholders4
y g• FI creditors objection (60-day period after EGM)
Transaction Conditions
• Shareholders’ approval (FI is eligible to vote its shares at the CNH EGM and intends to vote in favour of the agreed transaction)
• €250m cap on exercise of withdrawal rights by FI shareholders and exercise of any creditors’ rights (maximum cash outlay)
5
May 30th, 2012Potential Combination of Fiat Industrial and CNH 10
Conditions (maximum cash outlay)• Receipt of necessary regulatory and NYSE listing approval
Group structure pre and post completionGroup structure pre and post completion
Current Group Structure Group Structure Post Transaction Completion
• Former FI shareholders
• Former CNH shareholders
• FI shareholders
X %1
FIAT INDUSTRIALS.P.A.
• Listed on the Milan Stock Exchange
NewCo
• Incorporated in the Netherlands or similar structure
• Incorporated in Italy
• Listed on the NYSE and secondary European listing
~88%
Exchange
100% 100% 100% 100%100%
structure listing• Loyalty voting structure
• CNH minorities ~12%
IvecoCNH Global N.V.
FPT Industrial Iveco FPT
IndustrialCNH
• Incorporated in the Netherlands
May 30th, 2012Potential Combination of Fiat Industrial and CNH 11
• Listed on the NYSE as a FPI
(1) Less than current ~12% in CNH
Rationale for the transaction
FFULLULL COMBINATIONCOMBINATION OFOF FIFI ANDAND CNHCNH HASHAS SEVERALSEVERAL POTENTIALPOTENTIAL BENEFITSBENEFITS FORFOR BOTHBOTH SETSSETS OFOF SHAREHOLDERSSHAREHOLDERS
• Create a single class liquid stock listed in New York with secondary listing in Europe
• Build a true peer to the major North American-based capital goods companies
• Increase liquidity and attract new capital goods-focused investor base and analyst coverage in the CapitalMarkets and Valuation
q y p g y gUS
• Capitalize on scarcity value deriving from being the only significant agricultural equipment player listed in Europe
• Eliminate CNH illiquidity discount and achieve, over time, a valuation more in line with global q y gcapital goods peers
• Improve credit profile and access a broader liquidity pool
• Create opportunities for regional consolidation of Financial Services platforms or common development of new infrastructures in developing markets
Strategic and Operational
development of new infrastructures in developing markets
• Acquire greater scale in key emerging markets, such as China, Brazil, Argentina, translating into more effective local execution
• Simplify intra-group dealings
May 30th, 2012Potential Combination of Fiat Industrial and CNH 12
• Secure powertrain know-how for CNH
• Increase flexibility to pursue strategic transactions and reward long-term shareholding
Summary process timelineSummary process timeline
May 30th
FI approach to CNH
BoD to approve formal Merger Plans
SEC registration and NYSE listing approval
EGMs
60-day period for FI creditors' opposition
Secondary EU listing
Double vote mechanism implementation
Closing
Closing targeted by
May 30th, 2012Potential Combination of Fiat Industrial and CNH 13
Closing targeted by year-end 2012
CNH – Evolution of Fiat / FI shareholding since 1991since 1991
80%
Acquisition of 80% stake of Ford New Holland from Ford
Ford maintain a 20% stake
~70%IPO on NYSE of ~30% stake
~85%Stake increased via conversion of US$1.4bn of “advance to capital” provided by Fiat
~90%Automatic conversion of Preference shares into common shares
1995 19961991 1999 2006 Today2000 2003… … … … …
100% ~70%Acquisition of 100% of CASE for $4.6bn, entirely financed with debt
Creation of CNH Global NV
~85%Issuance of 8mn convertible Preference shares to Fiat in exchange for
Stake progressively increased to 100% via:
~88%
~2% dilution related to shares issued for incentive compensationCreation of CNH Global NV g
$2bn of debt owed to Fiat
i) Acquisition of Ford stake and
ii) Capital increase of $594mn subscribed by Fiat only
compensation schemes
May 30th, 2012Potential Combination of Fiat Industrial and CNH 15
ContactsContacts
FIAT INDUSTRIAL INVESTOR RELATIONSFIAT INDUSTRIAL INVESTOR RELATIONS
- MANFRED MARKEVITCH – HEAD OF INVESTOR RELATIONSMANFRED MARKEVITCH HEAD OF INVESTOR RELATIONS
- FEDERICO DONATI – INVESTOR RELATIONS OFFICER
EMAIL: [email protected]
WEBSITE: www.fiatindustrial.com
May 30th, 2012Potential Combination of Fiat Industrial and CNH 16