DULUTH, GEORGIA, US — AGCO Corp. has entered into a joint venture with Trimble in which AGCO will acquire an 85% interest in Trimble’s portfolio of agricultural assets and technologies for cash consideration of $2 billion and the contribution of JCA Technologies. 

The joint venture creates a global leading mixed-fleet precision agriculture platform that will be the exclusive provider of Trimble Ag’s comprehensive technology offering, supporting the future development and distribution of next-generation agricultural technologies. 

Trimble Ag, a division of Westminster, Colorado, US-based technology company Trimble, offers a wide variety of user-friendly technologies compatible across brands, equipment models and farm types. Trimble’s hardware, software solutions and cloud-based applications span all aspects of the crop cycle, from land preparation to planting and seeding to harvest. 

“This landmark transaction creates a JV that becomes the premier mixed-fleet precision ag business in the world and accelerates AGCO’s strategic transformation,” said Eric Hansotia, chairman, president and chief executive officer, AGCO. “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.”

AGCO is a global leader in the design, manufacture and distribution of agricultural machinery and precision ag technology. JCA Technologies, a leader in the emerging area of autonomous agricultural machine systems, was acquired by AGCO in 2022. 

The joint venture will complement and enhance AGCO’s existing precision agriculture portfolio to deliver even more industry leading solutions across the crop cycle while supporting over 10,000 equipment models. 

By combining these two precision agriculture portfolios and leveraging multichannel access across Trimble Ag, AGCO OEM & Aftermarket, other OEMs and precision planting dealers, the joint venture will be positioned to drive outsized growth and better provide next-generation technologies to even more farmers around the world.

“The exclusive access to Trimble Ag products, combined with AGCO’s existing precision ag offerings also accelerates AGCO’s growth ambitions around autonomy, precision spraying, connected farming, data management and sustainability,” Hansotia said. “All of these touchpoints will result in us being even more farmer focused." 

Commercial synergies resulting from direct access to AGCO’s global equipment, aftermarket, other OEM and retrofit channels, in addition to modest run-rate cost synergies, are expected to approximately double the joint venture’s EBITDA by year five following closing.

“Farmers today are looking for mixed-fleet solutions across their tractors and the implements that they use to most efficiently and sustainably feed the world,” said Rob Painter, CEO of Trimble. “We believe a joint venture with AGCO, complemented by the successful mixed fleet approach that they have developed with their precision planting business model, can help us better serve farmers and OEMs together.”

The $2 billion purchase price for AGCO’s 85% ownership in the Trimble Ag business represents an implied enterprise value of approximately $2.35 billion and implies a transaction multiple of approximately 13.8x based on 2023E EBITDA of approximately $170 million. Inclusive of estimated revenue and run-rate cost synergies of $100 million by year three and the net present value of tax attributes in excess of $50 million, the synergized multiple is approximately 8.5x on a 2023E basis.

The transaction is not subject to a financing condition. AGCO has secured $2 billion in fully committed bridge financing from Morgan Stanley Senior Funding, Inc. The purchase price of $2 billion is expected to be funded by a combination of existing liquidity, free cash flow generation and new debt. AGCO remains committed to maintaining its solid investment grade credit rating. Closing is expected in the first half of 2024, subject to the satisfaction of regulatory approval and customary closing conditions.

AGCO also said its grain and protein business will be placed under strategic review as part of the company’s broader portfolio transformation. Under this review, AGCO will assess all strategic options to ensure the grain and protein customers are served in the best way possible, and that the business is best positioned to maximize its full potential.

Morgan Stanley & Co. LLC is acting as exclusive financial adviser to AGCO. Simpson Thacher & Bartlett LLP is acting as legal adviser to AGCO, and Troutman Pepper Hamilton Sanders LLP is acting as its financing counsel.