AGCO Corporation (NASDAQ:AGCO) and Trimble Inc. (NASDAQ:TRMB) have announced a significant merger of their precision-agriculture businesses.
Barron’s reported that AGCO will own 85% of the joint venture after paying Trimble $2 billion.
The joint venture, touted by AGCO CEO Eric Hansotia as the biggest agricultural technology deal ever, is valued at approximately $2.4 billion. The deal outpaces the 2021 acquisition of precision-agriculture company Raven by CNH Industrial (NYSE:CNHI) for $2.1 billion.
Precision agriculture, a relatively new sector in the ancient farming industry, utilizes computing power and software for efficient farming practices. The technology can deliver benefits such as guided self-driving tractors, improved seed placement, and targeted use of fertilizer and pesticides.
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The deal is expected to accelerate AGCO’s development of precision-farming technology, enabling it to compete more effectively with rivals like Deere & Company (NYSE:DE). “It greatly increases our technology team in terms of scale,” Hansotia noted, pointing to the potential for more high-tech solutions for farmers.
Analysts have lauded the joint venture, with Baird analyst Mig Dobre calling it a “good strategic option” for both companies. J.P. Morgan analyst Tami Zakaria labeled it a “positive catalyst,” while William Blair analyst Lawrence De Maria believes it could “reduce some of the inherent cyclicality in AGCO’s machinery business.”
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