Agco to acquire Trimble Ag assets for $2B through joint venture agreement

Agco (AGCO) announced it has entered into a joint venture, or JV, with Trimble (TRMB), where Agco will acquire an 85% interest in Trimble’s portfolio of Ag assets and technologies for cash consideration of $2B and the contribution of JCA Technologies. Commercial synergies resulting from direct access to Agco’s global OEM, aftermarket, other OEM, and retrofit channels, in addition to modest run-rate cost synergies are expected to approximately double the JV’s EBITDA by year five post closing. The $2B purchase price for Agco’s 85% ownership in the Trimble Ag business represents an implied enterprise value of approximately $2.35B and implies a transaction multiple of approximately 13.8x based on 2023 EBITDA of approximately $170M. Inclusive of estimated revenue and run-rate cost synergies of $100M by year three and the net present value of tax attributes in excess of $50 million, the synergized multiple is approximately 8.5x on a 2023E basis. The transaction is not subject to a financing condition. Agco has secured $2B in fully committed bridge financing from Morgan Stanley Senior Funding. The purchase price of $2B is expected to be funded by a combination of existing liquidity, free cash flow generation and new debt. Agco remains committed to maintaining its solid investment grade credit rating.