Largest Ag Tech Deal Ever: AGCO Acquires 85% of Trimble for $2 Billion
Announced today, AGCO and Trimble will form a new joint venture giving AGCO exclusive rights to distribute the Trimble portfolio of ag products.
The joint venture is a $2 billion deal which includes AGCO acquiring 85% interest in Trimble’s ag assets and technologies.
“This is the largest ag tech deal ever,” says Eric Hansotia, chairman, president and chief executive officer at AGCO. “And this is one of the most transformational events in our technology evolution.”
Hansotia shares what makes the deal unique is AGCO’s and Trimble’s parallel focus on the mixed fleet market.
“This is a milestone in AGCO’s focus on the farmer technology strategy that will create an industry leader in mixed fleet precision ag solutions,” he says.
Company leaders highlight how this joint venture enables this technology on more than 10,000 different models and almost any OEM. Trimble’s product portfolio includes displays, steering motors, application control, and software.
Specifically, Hansotia highlights how the joint venture enhances and accelerates his company’s growth ambitions around:
- autonomy
- precision spray
- farm data management
- sustainability
“Trimble is best known for its mixed fleet retrofit brand in the market. Combining this industry leader with Precision Planting, another industry leader, positions AGCO to turbocharge the growth of this critical business,” he says.
The go-to market for the joint venture is three-pronged:
- AGCO OEM and aftermarket
- Other OEMs
- Precision Planting dealers
“These ag products are sold in over 70 countries at 2400 independent distribution points,” Hansotia says. “We will be providing a growing number of mixed fleet farmers a choice that will provide the best option to work across their operation.”
The company plans to reach a $2 billion EBITDA in total precision ag business in the next five years. For reference, the Trimble ag business today has a $170/year EBITDA.
By 2025 AGCO expects that growth to come from:
- Overall precision ag market growth
- Growth in AGCO’s OEM and market channels
- Growth in AGCO’s precision planting channel
- Incremental cost synergies
As an example of growth potential, Hansotia references their own AGCO equipment from the factory—which includes two GPS receiver providers (one of which is Trimble, which will become the sole option.)
“We actually have less than half of our product going out with Trimble receivers today–interfacing with our navigation controller. So very quickly, we can transition a lot of our tractors, combines, and sprayers to utilize Trimble receiver technology,” he says.
In the past decade, AGCO has made a series of technology acquisitions including: Precision Planting, Apex.AI, JCA Technologies, Headsight, and Appareo.
The AGCO/Trimble joint venture is expected to close in the first half of 2024. The terms of the agreement have a minimum of seven years for the supply of Trimble products, with AGCO having the option to extend the terms.
In conjunction with announcing the new joint venture, AGCO says it will put its grain and protein business under a strategic review.
“This is part of our broader portfolio transformation to ensure our businesses are able to service the farmers the best way and that we continue to ensure we are delivering the best long term value to our shareholders,” Hansotia says.
Almost exactly 12 years ago, AGCO announced it was planning to acquire GSI for $940 million.
