CNH Industrial announced Monday it has purchased ag tech leader Raven Industries in an all-cash deal that broadens the ag equipment manufacturer's technology offerings in automated fieldwork, logistics and data management -- and accelerates CNH's work in the realm of autonomous operations.
The deal, which CNH hopes to close by the fourth quarter, gives Raven an implied value of $2.1 billion.
CNH said the purchase of Raven dramatically enhances its capabilities in a highly competitive technology market. CNH said Raven is a pioneer in the precision tech space and a leader in autonomy. The company said it believes Raven will be a key revenue driver by the middle of this decade as its technologies are integrated into CNH products.
"What we are buying is a tech hub in Sioux Falls, South Dakota, that significantly enhances our capabilities to provide precision autonomy across the product suite of CNH Industrial products," said Scott Wine, CEO of CNH Industrial.
The acquisition of Raven solidifies a longtime technology partnership between the two companies. CNH was already Raven's largest single customer, representing about 30% of income earned by Raven's Applied Technology Division (ATD). AGCO is another large ATD customer of Raven, according to CNH.
Wine predicts value in agricultural equipment will increasingly be found in technology applications, such as precision ag and autonomy compared to the more mechanical processes underlying machinery operations.
CRUCIAL TO OWN
As a result, Wine said it is crucial for CNH to own these capabilities.
"Precision agriculture and autonomy are critical components of our strategy to help our agricultural customers reach the next level of productivity and to unlock the true potential of their operations," Wine said.
"By coming together with CNH Industrial, we believe we will further accelerate (Raven's technological innovations) as well as bring tremendous opportunities and value to our customers -- once again fulfilling our purpose to solve great challenges," said Raven Industries President and CEO Dan Rykhus.
The Raven purchase is not the final tech purchase CNH expects to make. Wine explained that Raven does not represent the entire suite of technologies CNH anticipates it will ultimately need to acquire or develop. CNH will continue its search for technologies and capabilities not now represented in its own or in the Raven product lineup, he said.
Raven is predominately a player in North America. Wine believes Raven's portfolio has much undiscovered value overseas. "An initial opportunity is to take their product portfolio and send it through our global distribution network. South America and Europe offer good opportunities for growth with their current portfolio," Wine said.
Wine said he found confirmation in the pending Raven deal through CNH dealerships. During regular visits to dealers, Wine asked about technology needs and specifically Raven's technology offerings. Their response was always positive, he said. CNH's largest dealer is Titan Machinery, with 100 retail outlets in the U.S. and Europe, and it is a Raven dealer. "(Titan) has always been very, very complimentary of (Raven) product offerings," Wine said.
RAVEN'S THREE DIVISIONS
Raven Industries is organized into three business divisions: Applied Technology (precision agriculture), Engineered Films (high-performance specialty films) and Aerostar (aerospace) with consolidated net sales of $348.4 million for the 12 months ended Jan. 31, 2021.
The Applied Technologies Division offers precision agricultural technologies in the areas of applications controls, guidance and steering, field computers, boom controls, cloud services and logistics, and injection support. The division represents $160 million in revenue.
Raven offers autonomous products through two, branded product lines: OMNiPOWER and OMNiDRIVE.
OMNiPOWER is a self-propelled power platform that gives owners the ability to incorporate with the unit various farming implements farm implements like sprayers and spreaders.
OMNiPOWER allows farmers to remotely operate and send the unit on autonomous missions from a tablet. No driver is necessary.
OMNiDRIVE allows farmers to monitor and operate a driverless tractor and grain cart from the cab of a harvester. The autonomous system gives the combine operator an ability to offload grain on-the-go and then return the autonomous tractor to a predetermined unloading area.
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