Hedge fund Elliott has built a stake of less than 3 per cent in CNH Industrial, the tractor and truckmaker controlled by Italy’s Agnelli family that is preparing to split in two, said three people briefed on the situation.
This month CNH announced plans to hive off truck business Iveco into a separate company, leaving the more profitable agricultural equipment unit, as part of a long-term aim to double its profitability over the next five years.
Elliott, run by billionaire Paul Singer, built up its stake in the months before the announcement, in which CNH unveiled the split and plans to boost its profit margin to 10 per cent.
CNH will separate out Iveco, Iveco Bus and Heuliez Bus units into a single company by 2021. The divisions have combined revenues of $13bn. The remaining businesses, its tractor and construction equipment divisions, have combined revenues of $16bn.
The business is an unusual combination of trucks and tractors, and was itself spun out of Italy’s Fiat Chrysler by former chief executive, the late Sergio Marchionne, in 2012.
Mr Marchionne was a strong proponent of unlocking value by splitting up companies, and also split supercar brand Ferrari out from FCA during his 14-year long tenure.
CNH shareholders are expected to benefit when the separation takes place, with analysts forecasting that the value of the business will rise from $11.22 to as much as $16 a share.
Elliott’s investment is below the disclosure threshold of 3 per cent, and pales in comparison to the 29 per cent stake held by the Agnelli family through their Exor holding company, which has 42 per cent of voting rights over the business.
The hedge fund, which manages $38bn in assets, has increasingly taken aim at Italian companies in recent years, including Telecom Italia and Ansaldo STS, an Italian rail engineering