AGCO Announces Definitive Agreement to Sell its Grain & Protein Business
AGCO has announced a definitive agreement to sell the majority of its Grain & Protein business to American Industrial Partners (AIP) for $700 million in cash. The transaction includes the sale of five primary brands: GSI®, Automated Production® (AP), Cumberland®, Cimbria®, and Tecno®, but excludes AGCO's Grain & Protein business in China. This strategic move aligns with AGCO's focus on high-growth, high-margin agricultural machinery and precision ag technology products.
The company expects to use the proceeds for debt repayment, investment in technology and organic growth initiatives, and shareholder returns. AGCO anticipates incurring a loss on the sale ranging from $450 million to $475 million. The transaction, with a multiple of approximately 8.3x based on trailing twelve months adjusted EBITDA, is expected to close by the end of 2024, subject to regulatory approvals and closing conditions.
AGCO ha annunciato un accordo definitivo per vendere la maggior parte della sua attività di Grano & Proteine a American Industrial Partners (AIP) per 700 milioni di dollari in contanti. La transazione include la vendita di cinque marchi principali: GSI®, Automated Production® (AP), Cumberland®, Cimbria® e Tecno®, ma esclude l'attività di Grano & Proteine di AGCO in Cina. Questa mossa strategica è in linea con il focus di AGCO su macchinari agricoli ad alta crescita e ad alto margine e su prodotti di tecnologia agricola di precisione.
L'azienda prevede di utilizzare i proventi per il rimborso del debito, investimenti in tecnologie e iniziative di crescita organica, e per i ritorni agli azionisti. AGCO si aspetta di registrare una perdita sulla vendita compresa tra 450 milioni e 475 milioni di dollari. La transazione, con un moltiplicatore di circa 8,3 volte basato sull'EBITDA rettificato degli ultimi dodici mesi, dovrebbe chiudersi entro la fine del 2024, soggetta ad approvazioni normative e condizioni di chiusura.
AGCO ha anunciado un acuerdo definitivo para vender la mayoría de su negocio de Granos & Proteínas a American Industrial Partners (AIP) por 700 millones de dólares en efectivo. La transacción incluye la venta de cinco marcas principales: GSI®, Automated Production® (AP), Cumberland®, Cimbria® y Tecno®, pero excluye el negocio de Granos & Proteínas de AGCO en China. Este movimiento estratégico se alinea con el enfoque de AGCO en maquinaria agrícola de alto crecimiento y alto margen, así como en productos de tecnología agrícola de precisión.
La empresa espera utilizar los ingresos para el pago de deuda, inversión en tecnología, iniciativas de crecimiento orgánico y retornos a los accionistas. AGCO anticipa incurrir en una pérdida por la venta que oscila entre 450 y 475 millones de dólares. Se espera que la transacción, con un múltiplo de aproximadamente 8.3x basado en el EBITDA ajustado de los últimos doce meses, se cierre a finales de 2024, sujeto a aprobaciones regulatorias y condiciones de cierre.
AGCO는 American Industrial Partners(AIP)에게 그레인 & 프로틴 비즈니스의 대부분을 7억 달러 현금으로 판매하기 위한 최종 합의에 도달했다고 발표했습니다. 이 거래에는 GSI®, Automated Production® (AP), Cumberland®, Cimbria® 및 Tecno®라는 다섯 개의 주요 브랜드의 판매가 포함되지만, AGCO의 중국 내 그레인 & 프로틴 비즈니스는 포함되지 않습니다. 이러한 전략적 결정은 AGCO의 고성장, 고마진 농업 기계 및 정밀 농업 기술 제품에 대한 집중과 일치합니다.
회사는 이 자금을 부채 상환, 기술 투자, 유기적 성장 이니셔티브 및 주주 수익을 위한 용도로 사용할 것으로 예상하고 있습니다. AGCO는 판매에서 4억 5천만에서 4억 7천5백만 달러의 손실을 입을 것으로 예상하고 있습니다. 거래는 최근 12개월 조정 EBITDA 기준으로 약 8.3배의 배수에 해당하며, 규제 승인 및 종결 조건에 따라 2024년 말까지 완료될 것으로 예상됩니다.
AGCO a annoncé un accord définitif pour vendre la majorité de son activité Grains & Protéines à American Industrial Partners (AIP) pour 700 millions de dollars en espèces. La transaction inclut la vente de cinq marques principales : GSI®, Automated Production® (AP), Cumberland®, Cimbria® et Tecno®, mais exclut l'activité Grains & Protéines d'AGCO en Chine. Ce mouvement stratégique est en accord avec l'orientation d'AGCO vers des machines agricoles à forte croissance et forte marge, ainsi que des produits de technologie agricole de précision.
L'entreprise prévoit d'utiliser le produit de la vente pour le remboursement de la dette, des investissements dans la technologie et des initiatives de croissance organique, ainsi que pour le retour aux actionnaires. AGCO prévoit de subir une perte sur la vente allant de 450 millions à 475 millions de dollars. La transaction, avec un multiple d'environ 8,3x basé sur l'EBITDA ajusté des douze derniers mois, devrait être finalisée d'ici la fin de 2024, sous réserve des approbations réglementaires et des conditions de clôture.
AGCO hat eine endgültige Vereinbarung bekannt gegeben, die Mehrheit seines Geschäftsbereichs Getreide & Protein für 700 Millionen Dollar in bar an American Industrial Partners (AIP) zu verkaufen. Die Transaktion umfasst den Verkauf von fünf Hauptmarken: GSI®, Automated Production® (AP), Cumberland®, Cimbria® und Tecno®, schließt jedoch AGCOs Geschäft mit Getreide & Protein in China aus. Dieser strategische Schritt steht im Einklang mit AGCOs Konzentration auf wachstumsstarke, margenstarke Agrarmaschinen und Präzisionslandtechnikprodukte.
Das Unternehmen plant, die Einnahmen für die Rückzahlung von Schulden, Investitionen in Technologie, organische Wachstumsinitiativen und Ausschüttungen an die Aktionäre zu verwenden. AGCO rechnet mit einem Verlust aus dem Verkauf in Höhe von 450 Millionen bis 475 Millionen Dollar. Die Transaktion, die einem Multiplikator von etwa 8,3x basierend auf dem bereinigten EBITDA der letzten zwölf Monate entspricht, wird voraussichtlich bis Ende 2024 abgeschlossen, vorbehaltlich behördlicher Genehmigungen und Abschlussbedingungen.
- Sale of Grain & Protein business for $700 million in cash
- Strategic focus on high-growth, high-margin agricultural machinery and precision ag technology
- Proceeds to be used for debt repayment, technology investment, and shareholder returns
- Transaction multiple of 8.3x based on trailing twelve months adjusted EBITDA
- Expected loss on the sale ranging from $450 million to $475 million
- Divestiture of major business segment may impact overall revenue
Insights
AGCO's decision to divest its Grain & Protein business for
The sale will result in a significant one-time loss of
The use of proceeds for debt repayment, technology investments and shareholder returns is a balanced approach that should appeal to investors. This move could potentially improve AGCO's financial flexibility and return on invested capital in the long run.
It's worth noting that AGCO is retaining its Grain & Protein business in China, which could be a strategic decision given the country's significant agricultural market. Investors should monitor how this retained segment performs and integrates with AGCO's core business going forward.
Overall, while the short-term financial impact is negative, this divestiture could position AGCO for stronger, more focused growth in its core competencies, potentially leading to improved shareholder value in the long term.
AGCO's divestiture of its Grain & Protein business marks a significant shift in the agricultural equipment market landscape. This move reflects a broader industry trend towards specialization and focus on high-tech, precision agriculture solutions.
The sale of well-known brands like GSI®, Automated Production®, Cumberland®, Cimbria® and Tecno® to American Industrial Partners (AIP) could reshape competition in the grain, seed and protein production equipment sector. AIP's industrial expertise might invigorate these brands, potentially intensifying competition for remaining players in this space.
For AGCO, this divestiture aligns with its recent PTx Trimble joint venture, signaling a clear pivot towards advanced agricultural technology. This strategic refocus could position AGCO more competitively against tech-forward rivals like John Deere and CNH Industrial.
The retention of the China Grain & Protein business is intriguing, suggesting AGCO sees unique value or growth potential in the Chinese market. This decision could provide AGCO with a foothold in one of the world's largest agricultural markets while divesting from other regions.
Investors should watch for potential market share shifts in the grain and protein equipment sector, as well as AGCO's performance in precision agriculture following this strategic realignment. The move could catalyze further consolidation or specialization trends within the agricultural equipment industry.
"The divestiture of Grain & Protein supports AGCO's strategic transformation, recently accelerated by the PTx Trimble joint venture, which closed in April 2024," said Eric Hansotia, AGCO's Chairman, President and Chief Executive Officer. "Divesting this business allows us to streamline and sharpen our focus on AGCO's portfolio of award-winning agricultural machinery and precision ag technology products, which underpins a long-term focus on high growth, high margin and high free cash flow generating businesses."
"AIP has extensive experience in the industrial sector and vast carve-out expertise, which we believe will unlock new potential for the Grain & Protein business. We believe the move will help ensure its brands continue to lead the market in grain, seed and protein production equipment and remain well-positioned to deliver for farmers," added Hansotia.
AGCO expects to use the net proceeds from the transaction consistent with its stated capital allocation priorities, including debt repayment, disciplined investment in technology and organic growth initiatives and return of capital to shareholders.
The transaction perimeter to be sold includes the five primary Grain & Protein brands – GSI®, Automated Production® (AP), Cumberland®, Cimbria® and Tecno®. The transaction perimeter to be sold excludes AGCO's Grain & Protein business in
AGCO will begin reporting Grain & Protein as held for sale in the company's consolidated financial statements for the second quarter of 2024 through the closing date. The company expects to incur a loss on the sale of the business in the range of
The transaction purchase price implies a transaction multiple of approximately 8.3x based on Grain & Protein's trailing twelve months adjusted EBITDA as of March 31, 2024.
The transaction is anticipated to close before the end of the year, subject to regulatory approvals and other customary closing conditions.
Morgan Stanley & Co. LLC and Rabo Securities
About AGCO
AGCO (NYSE: AGCO) is a global leader in the design, manufacture and distribution of agricultural machinery and precision ag technology. AGCO delivers value to farmers and OEM customers through its differentiated brand portfolio including core brands like Fendt®, GSI®, Massey Ferguson®, PTx and Valtra®. AGCO's full line of equipment, smart farming solutions and services helps farmers sustainably feed our world. Founded in 1990 and headquartered in Duluth,
About AIP
American Industrial Partners ("AIP") is an industrials investor, with approximately
Cautionary Statements Regarding Forward-Looking Information
Forward-looking statements in this release, including statements about the transaction and our strategic plans as well as the financial impact to the Company resulting therefrom, and our ability to close the transaction and the timing of the closing, are subject to risks that could cause actual results to differ materially from those suggested by the statements. These risks include, but are not limited to, the ability to successfully complete the divestiture of Grain & Protein on a timely basis, including receipt of required regulatory approvals and satisfaction of other conditions, the risk that the loss on sale of the assets could ultimately be greater than we currently expect, and the ability of the Company to use the proceeds of the transaction consistent with its stated capital allocation priorities. Further information concerning these and other risks is included in AGCO's filings with the SEC, including its Form 10-K for the year ended December 31, 2023 and subsequent Form 10-Q filings. AGCO disclaims any obligation to update any forward-looking statements except as required by law.
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SOURCE AGCO Corporation
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