Dive Brief:
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Agco Corp. has entered a joint venture agreement to purchase an 85% stake in Trimble’s portfolio of agriculture assets and technologies, accelerating its precision agriculture efforts.
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The Georgia-based machinery manufacturer is prepared to pay $2 billion in cash and contribute its JCA Technologies subsidiary in exchange for a majority stake in Trimble and exclusive rights to its hardware, software and cloud-based application products for the next generation of farmers.
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The deal, if approved by regulators, is expected to close in the first half of 2024. It would be Agco’s largest transaction to date and enhance the company’s growth ambitions around autonomy, precision spraying, connected farming and other precision technology categories.
Dive Insight:
Agco’s efforts come as demand grows for technologies and farm practices that have the potential to increase yields, lower long-term costs and reduce environmental impacts.
The precision agriculture market is projected to surpass $19 billion by 2030, growing at an annual rate of 15%, according to Straits Research. Advocates support the category for its technological innovations that give farmers greater data insights into their operations, ranging from hyper-local forecasts to satellite images of their crops and more. Automating agriculture has accelerated as droughts and the Ukraine war have fueled worries about a “global food crisis.”
“The transformational nature of this deal will result in Agco offering a comprehensive suite of disruptive technologies across the crop cycle to address the farmers’ needs of tomorrow,” Eric Hansotia, chairman, president and chief executive officer, said in a presentation last week.
Trimble, a Colorado-based agriculture technology firm, would give Agco exclusive access to its core line of field display, steering motor, application control and software products as part of the joint venture.
Combined with Agco’s stack of technologies, Hansotia said the agreement would create a complete suite of mixed-fleet retrofit products that address harvesting, storage, planting, nutrient management and crop protection needs. Trimble would retain 15% ownership in the joint venture.
Agco said it’s expecting the acquisition to generate earnings growth in the first full year post-close and a 10% return of invested capital by year five. The company’s combined precision agriculture revenue is projected to surpass $2 billion by 2028.
In addition to the joint venture deal, Agco has plans to place its grain and protein business under review as part of its portfolio transformation efforts. Executives said they will assess all strategic options to ensure its grain and protein customers are serviced in the best way possible.
Correction: A previous version of the headline misrepresented the nature of the deal. Agco is acquiring assets under Trimble's agriculture unit.
