AGCO Makes $2B Move For Trimble Ag Assets And Technologies; Seeks Options For Grain & Protein Business

Agricultural machinery maker AGCO Corporation AGCO has entered into a Joint Venture (JV) with Trimble Inc TRMB, under which AGCO will acquire an 85% interest in Trimble's portfolio of Ag assets and technologies for cash consideration of $2.0 billion and the contribution of JCA Technologies.

The JV will create a global mixed-fleet Precision Ag platform that will be the exclusive provider of Trimble Ag's comprehensive technology offering.

"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," said AGCO Chairman, President and CEO Eric Hansotia.

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 JV's EBITDA by year five post-closing.

The $2.0 billion purchase price for AGCO's 85% ownership in the Trimble Ag business represents an implied enterprise value of about $2.35 billion and implies a transaction multiple of about 13.8x based on 2023E EBITDA of approximately $170 million. The transaction is expected to close in the first half of 2024. The company expects the transaction to be accretive to its revenue growth, operating margin profile and earnings per share in the first full year post-close.

AGCO held $463.5 million in cash and equivalents as of June 30, 2023. The company plans to fund the deal by a combination of existing liquidity, free cash flow generation, and new debt. 

AGCO has also announced that the Grain & Protein business will be placed under strategic review as part of its broader portfolio transformation.

Price Action: AGCO shares are trading higher by 0.60% at $118.25 on Thursday.