Deere & Co., the world’s largest maker of agricultural machinery, said it agreed to purchase Monsanto Co.’s Precision Planting LLC equipment unit as Deere accelerates its strategy to boost farmer efficiency and productivity with technology.
Through the deal, Moline, Illinois-based Deere will acquire facilities, the brand, the majority of the product portfolio including hardware, sensors and display systems and the majority of Precision Planting’s employees, relationships with dealers and original equipment customers, the manufacturer said Tuesday in a statement. The purchase is expected to close in 60 to 90 days, after which Precision Planting will operate independently as a wholly owned subsidiary of Deere, according to the company. Terms were not disclosed.
The acquisition is the third precision agriculture deal Deere has announced in the past five weeks. On Monday, the company said it agreed to acquire Monosem, the European leader in precision planter manufacturing. On Oct. 8, Deere agreed to form SageInsights, a joint venture to further develop a cloud software platform called MyAgCentral developed by data and software firm DN2K for agricultural retailers and other consultants.
Deere is working to make machines more intelligent and overall food production more efficient.
“Agriculture is changing significantly,” Deere Chief Information Officer John May said by phone. “John Deere wants to seamlessly connect people with equipment, technology and insights to give them a greater advantage with that entire production cycle.”
Precision Planting, which was founded in 1993, was acquired by St. Louis, Missouri-based Monsanto in 2012. Its main plant is in Illinois, and it has some operations in South America. Farmers often use Precision Planting components to replace what they buy with their seeding equipment and to retrofit older equipment for precision applications. For example, they can be used to apply the right pressure to sow seeds in the best depth and spacing for maximum yields.
The Precision Planting portfolio will broaden Deere’s capabilities to serve customers, whether they use its signature yellow and green tractors and planters or those made by competitors such as Agco Corp. or CNH Industrial NV, May said.
Climate Corp. will retain the digital agriculture portfolio that has been integrated into its FieldView platform. Deere has agreed to allow Climate Corp. to use its software connection to allow customers to send agronomic prescriptions from FieldView through the John Deere Operations Center to their equipment, according to the statement.
The “next revolution in productivity and yield improvement for farming” will come from greater use of technology by seed companies, equipment manufacturers, agronomists, crop consultants, service providers and growers, according to William Blair & Co. analyst Larry De Maria. Lower commodity prices will create a greater incentive for technology innovation and adoption in the future, he said.
Deere is facing a third straight year of falling revenue and earnings per share in the fiscal year that started this month as sales of farm equipment such as combines and tractors continue to drop around the globe because of lower crop prices. Farm equipment sales will likely be “dismal” in 2016 as weak markets and an inventory glut weigh on the industry, said Bloomberg Intelligence analysts Christopher Ciolino & Karen Ubelhart in a report on Oct. 13.