Trimble and AGCO Corporation on Thursday announced a $2 billion deal to form a joint venture to deliver innovations in automation and autonomy to agriculture. The new partners are calling their agreement the largest ever of its kind.
Georgia-based AGCO (Fendt, Massey Ferguson, Precision Planting and Valtra) is acquiring an 85% interest in Colorado-based Trimble Ag's portfolio of agricultural assets and technologies for $2 billion in cash and the contribution of JCA Technologies to the joint venture. JCA Technologies, Winnipeg, Manitoba, Canada, is a leading developer of autonomous agricultural systems. JCA was acquired by AGCO in May of 2022.
The joint venture will be the exclusive provider of Trimble Ag's technology and will maintain the Trimble brand and the Trimble retail channels. In addition, Precision Planting, AGCO OEM and 100 other original equipment manufacturers will bring new AGCO-Trimble technologies to market. Trimble's ag systems have been placed on 10,000 pieces of equipment.
"Farmers today are looking for mixed-fleet solutions across their tractors and the implements that they use to most efficiently and sustainably feed the world," Rob Painter, CEO of Trimble, said in a news release Thursday. "We believe a joint venture with AGCO, complemented by the successful mixed-fleet approach that they have developed with their Precision Planting business model, can help us better serve farmers and OEMs together."
The AGCO-Trimble agreement is set to close in the first half of 2024.
For more details about the joint venture, see "AGCO, Trimble Sign $2B Tech Agreement" here: https://www.dtnpf.com/….
On Thursday afternoon, Painter offered further comments in a follow-up interview with DTN/Progressive Farmer. Here is what he said.
DTN/Progressive Farmer: Would you put a bit of structure and organization around this joint venture between Trimble and AGCO Corporation?
Rob Painter: This is the largest ag tech deal in history, and I would submit it is a generational partnership. What actually did we do? Trimble's been in the agriculture business for about 30 years (Trimble was founded 45 years ago). AGCO has been building a precision ag business; Precision Planting was really a bit of a cornerstone for them. It's been one of the best companies out there in the last five to eight years. I've been super impressed with the momentum and the results AGCO has created with Precision Planting. Through this joint venture, we each contributed assets. Trimble has contributed the majority of our ag business. For their part, AGCO will contribute $2 billion upfront to Trimble and will take an 85% stake of that joint venture. We have a residual 15% ownership in that business.
DTN/Progressive Farmer: What part did Trimble hold back?
Painter: Charlie Trimble put the company on the map through GPS. Trimble's GPS technology is a horizontal technology used by surveyors, used by contractors, used by our transportation companies, used by cars on the road today, to get to centimeter-level accuracy out in the world. That is a set of intellectual property that we can't unwind or untangle. So, we keep that technology, and we have a supply agreement to the joint venture for positioning technology.
DTN/Progressive Farmer: All through today, Trimble and AGCO have talked about this agreement as being transformational. You have used that word. What does it mean?
Painter: There are very few opportunities in business that with the stroke of the proverbial pen where two companies can partner to change the landscape of capabilities. We could have created spraying and spreading technologies organically. And I might have been talking to you in five or 10 years. But with this move, we'll have all of those solutions under one entity's roof. That, to me, is what's so transformational about it.
DTN/Progressive Farmer: What does this new entity, this joint venture bring to the ag tech sector?
Painter: I describe it as follows: You know, one of the strategies we have at Trimble, and I think will continue under the joint venture, is we believe in this mixed-fleet ecosystem, a connected mixed-fleet ecosystem we think the market is looking for. The majority of farmers operate a mixed fleet. We're not just talking about the tractor or the combine, it's the implements that spray and spread seeds. There are hundreds and hundreds of those implement manufacturers. Almost by definition, farmers operate mixed fleets, and not many of them want to be locked in to one, let's say, OEM system. There is an opportunity for that community to be able to plug into our system. I believe in an open architecture, an open environment. An ability to plug in third-party applications and drive a network -- we think we are pretty uniquely positioned to do that. So, I could see that the ecosystem at large is going to be, I think, in time, quite interested in us. Trimble solutions are already used on 108 million acres of farmland and the thousands of dealers and 10,000 different machine types. That is access to the market that most companies take decades and decades to build, and very few could ever do it.
DTN/Progressive Farmer. You talk about the value of implements. There are already spraying and spreading technologies. What's the foreseeable value of technologies applied to implements?
Painter: Trimble acquired a business called Muller-Elektronik, a few years ago (purchased in 2017, the German company specialized in implement control and precision farming solutions). So, spray controls, those electronic control units on the nozzle. We think about connecting the physical and digital worlds, the hardware, the software, the work in the office and the work in the field. So, we think deeply about the power of that precise location, where accuracy matters -- to get that seed in the exact right place that optimizes the yield or that selectively sprays the weeds.
DTN/Progressive Farmer: What does the Trimble-AGCO joint venture mean for farmers in terms of technology delivery?
Painter: I think it means more innovation; it means research and development that fuels innovation targeting the mixed fleet. We work with over 100 OEMs today. We think about both the aftermarket mix, as well as working with the OEMs in their factories. We're also picking up AGCO as an OEM customer and have the ability to innovate with them on the iron side.
DTN/Progressive Farmer: So, what does innovation look like across mixed fleets?
Painter: It is innovation across the crop lifecycle. It is innovation that's connected. Think about connecting the data. Think about connecting users. Think about connecting workflow. And that's what farmers can expect out of us -- an ability to upgrade their technologies, ability to have a software ecosystem that's bringing the best capabilities together to create a leading ag operating system. That's what they can expect from us. They can expect us to build out the best technology dealer channel in the world to support them in the field, and I think that's something not to be underestimated.
Dan Miller can be reached at email@example.com
Follow him on Twitter @DMillerPF
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