) was spun off from Fiat SpA in January 2011 and currently consists of three main divisions: Iveco, FPT Industrial and Case New Holland Global (CNH). Iveco makes trucks and commercial vehicles, mostly in Western Europe and Latin America. FPT Industrial is an engine manufacturer for CNH, Iveco and other non-captive clients. CNH is second in the world among agricultural equipment companies, behind Deere, and the fifth-largest construction equipment company. While Fiat Industrial currently owns just under 90% of CNH, Fiat Industrial’s management just announced it is pursuing a full merger with the company. We believe CNH is strong and is well-positioned to benefit from global food consumption growth. In our view, this merger will provide Fiat Industrial with several advantages, including improved utilization of FPT technology with CNH, a more efficient capital structure along with significant net interest expense savings, better integration of financial services, increased scale in emerging markets and more flexibility to pursue strategic actions. We also think that based on these expected advantages, this merger is very good news for Fiat Industrial shareholders. The economic distress enveloping Italy has depressed the stock prices of many choice companies domiciled there, enabling us to purchase shares of Fiat Industrial at what we view as an extreme discount. Fiat Industrial is an internationally diversified company that generates only a fraction of its sales and profits in Italy and less than 25% of its sales in Western Europe.
From Oakmark Global Select Fund Letter to Shareholders Third Quarter
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