Trimble and AGCO Corp. are forming a joint venture by way of a blockbuster technology agreement. AGCO pays Trimble $2 billion cash for 85% of its agricultural assets and technologies. The as-yet-to-be-named joint venture will be the exclusive provider of Trimble Ag's technology and will maintain the Trimble brand and Trimble retail channels. With regulatory approval, AGCO will own 85% of the venture; Trimble will own 15%.
The new tech partners are calling the agreement the largest ever of its kind.
"We are superhappy right now," AGCO CEO Eric Hansotia tells DTN/Progressive Farmer. "It's the biggest ag tech deal in history, and essentially, it combines Trimble's ag assets, everything they do in the ag industry, with [AGCO's] precision ag business."
Georgia-based AGCO (Fendt, Massey Ferguson, Precision Planting and Valtra) intends to grow its business around autonomy, precision spraying, connected farming, data management and sustainability. By 2030, it promises to deliver technologies that will give farmers full-season autonomous opportunities.
AGCO is also contributing JCA Technologies to the joint venture. JCA, of Winnipeg, Manitoba, in Canada, is a leading developer of autonomous agricultural systems and was purchased by AGCO in May 2022.
The agreement does not include Trimble's guidance technologies, but there is agreement that Trimble will channel that technology into the joint venture. AGCO's Precision Planting, AGCO OEM (original equipment manufacturer) and 100 other OEMs also will bring the newest AGCO-Trimble technologies to market. Moreover, Trimble's ag systems already reside on 10,000 pieces of equipment. Trimble Ag represents about 20% of Trimble's overall technology business.
With this announcement, AGCO also reveals that its Grain and Protein business will be placed under strategic review as part of AGCO's broader portfolio transformation.
"[This is] a marriage of two super innovative teams serving every single farmer regardless of what brand equipment they have," Hansotia says. The joint venture forms with much opportunity ahead of it. AGCO has a list of 140 areas where it wants to automate farming operations, building toward autonomous applications.
Key to AGCO's technology strategy has been building systems that can be applied in the factory or retrofitted onto existing machines. That strategy mirrors the technology space where Trimble has built its reputation for innovation, especially its guidance technologies. Trimble Ag's hardware, software solutions and cloud-based applications span the crop cycle and are applied across brands, equipment models and farm types.
"This is the largest ag tech deal in history," says Rob Painter, CEO of Trimble, "and I would submit it is a generational partnership. 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."
Adds Hansotia, "The DNA of AGCO is to put farmers at the heart of everything we do. We call it Farmer First. We have just bought a lot more capacity. Our job is to continue to make the farmer more profitable through productivity and more sustainable."
The AGCO-Trimble agreement is anticipated to close in the first half of 2024.
Q&A WITH TRIMBLE CEO ROB PAINTER:
Editor's Note: In an interview with DTN/Progressive Farmer, Trimble CEO Rob Painter lays out the meaning of the new venture between Trimble and AGCO.
DTN/Progressive Farmer: Would you put a bit of structure and organization around this joint venture between Trimble and AGCO Corp.?
Rob Painter: AGCO has been building a precision ag business; Precision Planting was really a bit of a cornerstone for them. I've been superimpressed 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 up front to Trimble and will take an 85% stake of that joint venture. We have a residual 15% ownership in that business.
DTN/PF: What parts 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/PF: 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, two companies can partner to change the landscape of capabilities.
DTN/PF: What does this joint venture bring to the ag tech sector?
Painter: We believe in this mixed-fleet ecosystem, a connected mixed-fleet ecosystem. We're not just talking about the tractor or the combine; it's the implements that sprays and [that] 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. I believe in an open architecture, an ability to plug in third-party applications. Trimble solutions are already used on 108 million acres of farmland and 10,000 different machine types. That is access to the market that most companies take decades and decades to build.
DTN/PF: What's the foreseeable value of technologies applied to implements?
Painter: Trimble acquired a business called Muller-Elektronik (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/PF: What does technology look like across mixed fleets and crop life cycles?
Painter: 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.
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