Agco will acquire Trimble Ag Assets and Technologies through a joint venture which is expected to see the organisation's precision agriculture revenue exceed US $2 billion by 2028.
The joint venture will see Agco acquire an 85 per cent interest in Trimble's portfolio of ag assets and technologies for cash consideration of US $2 billion and the contribution of JCA Technologies.
This joint venture will create a global leading mixed-fleet precision ag platform that will be the exclusive provider of Trimble Ag's comprehensive technology offering, supporting the future development and distribution of next-generation ag technologies.
Trimble Ag offers a wide variety of technologies compatible across brands, equipment models and farm types. Its hardware, software solutions and cloud-based applications span all aspects of the crop cycle, from land preparation to seeding and harvest.
"This landmark transaction creates a joint venture that becomes the premier mixed-fleet precision ag business in the world and accelerates AGCO's strategic transformation," Agco chairman, president and chief executive officer Eric Hansotia said.
"This deal significantly enhances Agco's technology stack with disruptive technologies that cover every aspect of the crop cycle, which ultimately helps us better serve farmers no matter what brand they use."
Mr Hansotia said the joint venture would complement and enhance Agco's existing precision ag portfolio to deliver even more industry leading solutions across the crop cycle, while supporting more than 10,000 equipment models.
He said by combining these two precision ag portfolios and leveraging multi-channel access across Trimble Ag, Agco OEM & Aftermarket, other OEMs, and precision planting dealers, the joint venture would be positioned to drive outsized growth and better provide next-generation technologies to even more farmers around the world.
"The exclusive access to Trimble Ag products, combined with Agco's existing precision ag offerings also accelerates Agco's growth ambitions around autonomy, precision spraying, connected farming, data management and sustainability," he said.
"All of these touchpoints will result in us being even more farmer focused."
Commercial synergies resulting from direct access to Agco's global OEM, aftermarket, other OEM, and retrofit channels, in addition to modest run-rate cost synergies, are expected to approximately double the joint venture's EBITDA by year 5 post-closing.
"Farmers today are looking for mixed fleet solutions across their tractors and the implements that they use to most efficiently and sustainably feed the world," Trimble chief executive officer Rob Painter said.
"We believe a joint venture with Agco, complemented by the successful mixed fleet approach that they have developed with their precision planting business model, can help us better serve farmers and OEMs together."
The transaction is not subject to a financing condition. Agco has secured US $2 billion in fully committed bridge financing from Morgan Stanley Senior Funding, Inc. The purchase price of US $2 billion is expected to be funded by a combination of existing liquidity, free cash flow generation and new debt. Agco remains committed to maintaining its solid investment grade credit rating.
Closing is expected in the first half of 2024, subject to the satisfaction of regulatory approval and customary closing conditions.
Agco has also announced that their Grain & Protein business will be placed under strategic review as part of the company's broader portfolio transformation. Under this review, Agco will assess all strategic options to ensure the Grain & Protein customers are serviced in the best way possible, and that the business is best positioned to maximise its full potential.
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