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Dive Brief:
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Agricultural machinery producer Agco has finalized a deal to offload the bulk of its grain and protein operations as part of a strategic shift towards precision technology.
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Through this transaction, American Industrial Partners is set to acquire Agco’s grain storage solutions and livestock management systems, focusing on sectors such as poultry, swine, and egg production for a sum of $700 million.
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The agreement is anticipated to finalize by year-end, covering brands like GSI, Automated Production, Cumberland, Cimbria, and Tecno, while excluding Agco’s grain and protein businesses situated in China.
Dive Insight:
Last September, Agco decided to conduct a strategic review of its grains and proteins segment as it aimed to emphasize digital services and products, spurred by the $2 billion acquisition of Trimble Ag assets. Agco’s review reflects its commitment to modernization.
According to Agco Chairman, President, and CEO Eric Hansotia, “Selling this division enables us to refine our focus on AGCO’s collection of award-winning agricultural machines and precision ag technology, which emphasizes sustained growth, high margins, and substantial free cash flow.”
After grappling with labor shortages and increased steel costs during the pandemic, Agco’s grain and protein brands saw recovery last year, and margins improved notably in Q4 2023 despite a drop in sales.
During a conference call in May, Chief Financial Officer Damon Audia noted there was considerable external interest in the grain and protein division, which encompasses GSI, recognized as the leading provider of steel storage bins for agriculture.
American Industrial Partners, described as an industrial-centric private equity firm, specializes in enhancing industrial operations primarily across North America, targeting corporate divestitures, management buyouts, and similar transactions.
Hansotia added, “AIP’s extensive industrial sector experience and ability to manage carve-outs will reveal new avenues for the Grain & Protein division. This transition helps secure the brands’ positions as leaders in equipment for grain, seed, and protein production, thereby enhancing support for farmers.”
Agco’s grain and protein sector generates around $1 billion in annual revenue and operates across 14 manufacturing facilities located in North America, Brazil, Europe, and Malaysia. Following the sale, Agco expects to incur a financial setback between $450 million and $475 million.
SOURCE
Maria Sanchez completed her Bachelor’s degree in Plant Sciences from the University of California, Davis, in the USA. Her studies focused on plant genetics and biotechnology, with an emphasis on developing disease-resistant crop varieties. Maria has contributed to several research projects aimed at improving crop resilience to climate change and is now pursuing her Master’s degree in Plant Breeding.
