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Baird says Caterpillar should consider acquisition of Agco
The Fly

Baird says Caterpillar should consider acquisition of Agco

Baird analyst Mircea Dobre says that while Caterpillar’s (CAT) history with agriculture is complicated, development of precision has "materially improved" industry dynamics. The firm believes the company should consider acquiring Agco (AGCO). Agco is an "attractively valued asset" that would allow Caterpillar a meaningful re-entry in the space, the analyst tells investors in a research note. With agriculture above mid-cycle levels, Agco shareholders" could be enticed by a full valuation offer" and Caterpillar has the resources to rapidly expand the company’s tech stack, further diversify its cycle exposure and "play the long game in a highly attractive verticals," contends Baird. Assuming Caterpillar would pay a similar multiple that Deere’s paid for Wirtgen in 2017, a deal could be worth $17.4B, which would result in a purchase price of $223 per Agco share, or a 60% premium to yesterday’s closing price, the firm says.

Published first on TheFly

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