New Holland to purchase Case in effort to run with Deere

Farm equipment

May 18, 1999|By BLOOMBERG NEWS

RACINE, Wis. -- New Holland NV, the world's second-biggest farm-equipment maker, said yesterday that it will buy Case Corp. for $4.3 billion in cash to cut costs and compete better with market leader Deere & Co.

New Holland will sell debt and equity to pay for the $55-a-share purchase, which is 23 percent higher than Case's closing price Friday and 51 percent more than a week ago. Fiat SpA, Italy's largest industrial company, owns 69 percent of New Holland and will own 71 percent of the new company.

Case shares closed up $3.6875 at $48.50 yesterday in composite trading. New Holland's shares ended down $1.1875 at $16.375.

New Holland's and Case's earnings have fallen as crop prices dropped by 25 percent in the past three years, hurting farm incomes and spurring discounts on tractors and combines. Case shares are at the same price level as in May 1996. The joined companies will have sales of about $12 billion, rivaling that of Deere.

"It's fundamental for them to get bigger," said Massimo Cenci, a Fiat analyst at Monte Paschi Mercato SIM, in Milan.

Jean-Pierre Rosso, chairman and chief executive officer of Racine-based Case, will have the same positions in the combined company. Umberto Quadrino, New Holland's chief executive, will be co-chairman for a transition period. New Holland is incorporated in the Netherlands, with headquarters in London.

The combined companies expect to achieve annual savings of $400 million to $500 million within four years, New Holland said.

The combination will result in some job cuts and plant closings, although no detailed announcements will be made until the companies hold discussions with regulatory agencies and union officials.

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