CNH Buys Raven

CNH Industrial says its intention to purchase Raven Industries will dramatically enhance its capacities in automated field operations (mapping, prescriptions, zone management, section control), logistics, data management and autonomous taskings.

CNH intends to purchase Raven in an all-cash deal which it hopes to close by the fourth quarter of this year. The deal gives Raven an implied value of $2.1 billion. The worldwide manufacturer expects Raven, with its broad suite of technologies and engineering expertise, will become one of its key revenue drivers.

"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," says Scott Wine, CEO, 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 is convinced the value in agricultural equipment is increasingly realized in technology applications, such as precision ag and autonomy, compared to the more traditional mechanical workings of agricultural machines.

UNLOCK NEW POTENTIAL

"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 says.

Dan Rykhus, president and CEO for Raven Industries, adds, "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."

LOOKING FOR MORE

The Raven purchase is not the final arrow in CNH's quiver. Raven does not represent the entire collection of technologies CNH anticipates it will ultimately need to develop for its agricultural businesses. CNH will continue its search for technologies that broaden its tech product lines, Wine says.

Raven is predominately a player in North America. As such, 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 says.

He says he found confirmation in the time leading up to the pending Raven deal through CNH dealerships. During regular dealer visits, Wine asks about technology needs and specifically Raven's technology offerings. Their response was always positive to Raven, he says. 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 says.

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 Technology 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.

A Look Inside Raven:

Prior to CNH's purchase of Raven Industries, Sioux Falls, South Dakota, Progressive Farmer spoke with Dominic Walkes, Raven's director of strategic initiatives. During that interview (April 29, 2021), he offered insight into Raven's direction.

Raven has been busy this year. It expanded its autonomous farming properties when it purchased the intellectual property and patents of Jaybridge Robotics (announced April 7, 2021). The portfolio includes patents for path planning, obstacle detection and avoidance, and multimachine control.

Pre-CNH, Raven also launched an autonomous growth platform, OMNi. The OMNi brand organizes Raven's developmental direction and its advancements in autonomous solutions.

"OMNi solutions provide multiple paths to autonomy and equip the ag professional to get more, do more and give more from their operation," Raven explains in a release. OMNiDRIVE replaces the "AutoCart" name from the previous acquisition of Smart Ag. The former "DOT" name is now OMNiPOWER.

OMNiDRIVE is Raven's aftermarket technology kit that converts existing tractors into driverless machines during harvest. The application allows operators to monitor and operate a driverless tractor from the cab of the harvester -- the tractor, with cart, directed to a predetermined unloading area -- without a second driver.

OMNiPOWER is a self-propelled platform offering interchangeable implements for spreading and spraying.

The following is the conversation with Walkes.

Progressive Farmer: Tell us about the OMNi brand launch.

Walkes: Raven is on a journey to bring higher levels of autonomy into the agricultural space. We have had some acquisitions, DOT, SmartAg, Jaybridge. It is exciting to launch a branding campaign that brings all those components together under the OMNi brand.

Progressive Farmer: What does the Jaybridge package bring to Raven product development?

Walkes: Jaybridge had a nice portfolio that we see as giving us flexibility for future functionalities and capabilities. Their ability to path plan or coordinate with multiple machines are some things that we are keenly interested in.

Progressive Farmer: Would you explain Raven's general philosophy toward automation?

Walkes: We want to help farmers do more with less, to optimize, to be more efficient. As we see opportunities for us to take the technologies we have today, or [develop the] competencies and apply them in new ways, our focus is on bringing higher levels of machine automation and autonomy into the ag space. GPS-guided solutions have been in the marketplace for some time. We will continue to build off that by using advancements in technology and in communications.

Progressive Farmer: What's driving autonomy research at Raven?

Walkes: There are labor challenges on the heels of COVID. That is really changing the dynamics, the level of interest we are seeing. We're just scratching the surface to see what's possible to optimize the entire farm.

Progressive Farmer: In the nearer term, how does Raven operate in the autonomous farming landscape?

Walkes: We see it happening in progression, building to a point where the person in the field today can be remote or remote for a portion of the mission. That's on the near-term horizon.

Progressive Farmer: When does full autonomy come?

Walkes: To get to that Holy Grail where the machine drives itself out of the shed, goes to a field, executes a mission and then comes back when it's done, over-the-road transport is still a big one that we see in the farther horizon.

Progressive Farmer: Explain how limitations on field-level digital communication impact Raven's drive to full autonomy.

Walkes: We look at communications as "in the field" and "beyond the field." We've had nice advancements in both. I believe in-the-field communications are more mature. With the availability of broadband, I have optimism for continued growth to enable new and advanced capabilities. Progressive Farmer: What is lacking, the technology holes that inhibit the ability of machines to communicate with one another or with distant managers?

Walkes: Speed and coverage. I'd say coverage is more challenging than speed.

Progressive Farmer: Would you explain?

Walkes: In my opinion, there is a misperception that 5G might solve this. To me, it could really be the proliferation of 3G and 4G into remote and rural areas, or an alternative to cellular communications that provides a better blanket for those acres.

Progressive Farmer: Is 5G not reliable in rural areas, or is it too expensive?

Walkes: It doesn't seem [to be] financially viable in remote areas. We're talking about areas that never got 3G, never got 4G. I don't see why those areas would get 5G or why that would happen on a faster pace. Maybe I'm too pessimistic. But, that's my opinion.

Progressive Farmer: What alternatives are there to cellular communications?

Walkes: Satellite-based solutions have been around for a long time. We're seeing nice activity in that space with Starlink and others trying to drive this into more mainstream communications. But, we still have a way to go for that to be truly viable. (Starlink is a satellite internet constellation built by SpaceX to provide satellite internet access. The constellation will consist of thousands of mass-produced small satellites in low earth orbit.)

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