AGCO Corp to acquire $2 billion stake in Trimble unit to boost agri portfolio
Summary
The race among farm-equipment companies to automate agriculture has accelerated, as drought in key grain-producing countries and the war in Ukraine fuels a global food crisis, with U.S. farmers scrambling to boost crop yields. The precision-agriculture approach employs technology and the global positioning system to ensure that seeds, fertilizer and chemicals are used correctly. "We believe the acquisition is a value creation event for AGCO, with the potential to lift consolidated profit margins, while deploying excess cash for growth that is already well-aligned with its OEM-agnostic Precision Planting channel," Oppenheimer analysts said in a note. Shares of Trimble, whose agribusiness offers software and cloud-based applications that help farmers in all aspects of the crop cycle, rose 1.7% to $50.1 in early trade. AGCO, which also said it would place its grain and protein business under a strategic review as it seeks to transform its portfolio, has secured $2.0 billion in fully committed bridge financing from Morgan Stanley for the transaction.
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