USA – AGCO Corporation, a global leader in the design, manufacture, and distribution of smart solutions for sustainable agriculture, has announced a major strategic shift with a definitive agreement to sell the majority of its Grain & Protein business to American Industrial Partners (AIP) in an all-cash transaction valued at US$700 million.
The deal, which is subject to working capital and other customary closing adjustments, represents a significant step in AGCO’s ongoing transformation efforts.
Eric Hansotia, AGCO’s Chairman, President, and Chief Executive Officer, emphasized that this divestiture aligns with the company’s strategic goals.
“The divestiture of Grain & Protein supports AGCO’s strategic transformation, recently accelerated by the PTx Trimble joint venture, which closed in April 2024,” Hansotia stated.
“By divesting this business, we aim to streamline our focus on AGCO’s portfolio of award-winning agricultural machinery and precision ag technology products, which are central to our long-term strategy of high growth, high margin, and high free cash flow generating businesses.”
Hansotia further noted that AIP’s extensive experience and niche expertise in the industrial sector are expected to unlock new potential for the Grain and protein business.
“We believe this move will ensure the brands within the business continue to lead the market in grain, seed, and protein production equipment and remain well-positioned to meet farmers’ needs,” he added.
The transaction involves the sale of five primary Grain & Protein brands: GSI®, Automated Production® (AP), Cumberland®, Cimbria®, and Tecno®. However, AGCO’s Grain & Protein operations in China will not be included in this sale.
The company plans to allocate the net proceeds from the transaction according to its capital allocation priorities. These include debt repayment, disciplined investment in technology and organic growth initiatives, and returning capital to shareholders.
AGCO will report the Grain and protein business as held for sale in its consolidated financial statements for the second quarter of 2024 through the closing date.
The company anticipates incurring a loss on the sale in the range of US$450 million to US$475 million. The purchase price implies a transaction multiple of approximately 8.3x based on the Grain & Protein business’s trailing twelve months adjusted EBITDA as of March 31, 2024.
Pending regulatory approvals and other customary closing conditions, the transaction is expected to close before the end of the year.
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