AGCO selling grain and protein portfolio for $700M

AGCO has agreed to sell most of its grain and protein business for $700 million to American Industrial Partners, an industrials investor worth $16 billion, in an all-cash transaction.

The sale, AGCO President and CEO Eric Hansotia said, "allows us to streamline and sharpen our focus on AGCO's portfolio of award-winning agricultural machinery and precision ag technology products, which underpins a long-term focus on high growth, high margin and high free cash flow generating businesses."

AGCO recently formed a $2 billion joint venture with Trimble called PTx Trimble. It expects to lose $450 million to $475 million on the sale, according to its July 25 press release.

Known for its popular tractor brands such as Fendt and Massey Ferguson, AGCO’s transaction includes the sale of five primary grain and protein brands, including GSI, Automated Production (AP), Cumberland, Cimbria, and Tecno, but excludes the Grain & Protein business in China.

The net proceeds from the deal will hep AGCO pay off debt, invest in technology and return capital to shareholders.

"AIP has extensive experience in the industrial sector and vast carve-out expertise, which we believe will unlock new potential for the Grain & Protein business," Hansotia said. "We believe the move will help ensure its brands continue to lead the market in grain, seed and protein production equipment and remain well-positioned to deliver for farmers."

In its own press release, AIP said AGCO’s Grain & Protein division generates annual revenue of about $1 billion and employs approximately 3,200 people with 14 manufacturing facilities in North America, Brazil, Europe and Malaysia.

“Food production is a critical area of global growth and as a proven innovator with strong solutions addressing storage, process control, efficacy, and environmental footprint, the Company is well positioned for success,” AIP Partner Eric Baroyan said. “With operations across North America, Brazil, Europe and Malaysia, the company is highly regarded by its customers as an enabler of efficiency and profitability gains.”

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