AGCO to Acquire Precision Planting

Three and a half months after Monsanto canceled its deal to sell Precision Planting to John Deere, AGCO has signed a definitive agreement to acquire Precision Planting from The Climate Corp., a subsidiary of Monsanto.

This is the most significant acquisition AGCO has made in the last decade, as it will likely make waves in the market and AGCO will now have an entry point into the high-speed planter market.

Greg Peterson, director of investor relations at AGCO, anticipates the deal will be finalized during the third quarter. He stresses that in the short term, nothing will change in terms of the distribution network. In addition, Precision Planting equipment will still be available for other brands of planting equipment.

Peterson says that as time goes on, AGCO will increase distribution of Precision Planting products, particularly outside of the U.S.

Nathan Zimmerman, precision farming manager with A.C. McCartney an AGCO dealership in Mount Sterling, Ill., says the acquisition will have a positive impact on their service business.

Zimmerman says:
"We've been Precision dealers for about a year, but we expect our service side will grow quite a bit more now. We're required to stock Precision parts and going forward, I see us as having an advantage over some of those dealers who don't stock as much inventory in addition to us having the manufacturer support under the AGCO umbrella. As a dealership, I think this will position us well in the planter market moving forward, especially with new customers who maybe weren't necessarily AGCO customers."

Case IH dealers are uneasy about the news, with many of the same concerns they had when Deere was in line to acquire Precision Planting. One Case IH dealer says while there is still a lot to be discovered right now with the way AGCO will approach Case IH dealers, all of his dealership's planters are tied to Precision Planting currently. If AGCO were to pull that business away from them, it would significantly impact the dealership's business.

However, he goes on to say that it's still too early to tell if the deal will even be approved.

AGCO
www.agcocorp.com