Capital Equipment News

Deere & Company has announced that it has signed a definitive agreement to acquire the Wirtgen Group, a leading global manufacturer of road construction equipment.

Deere to acquire Wirtgen groupThe purchase price for the equity is €4,357 billion in an all-cash transaction. The total transaction value is approximately €4,6 billion (about $5,2 billion), including the assumption of net debt and other considerations.

The Wirtgen Group had record sales of €2,6 billion in the year ending December 31, 2016.

Deere expects the transaction to be accretive to earnings per share and currently expects to fund the acquisition from a combination of cash and new equipment operations debt financing.

Headquartered in Germany, the Wirtgen Group has five premium brands across the entire road construction sector spanning milling, processing, mixing, paving, compaction and rehabilitation. Wirtgen’s highly complementary product portfolio enhances Deere’s existing construction equipment offering and will establish Deere as an industry leader in global road construction sector. The Wirtgen Group has a global footprint with approximately 8 000 employees and sells products in more than 100 countries through a large network of company-owned and independent dealers.

“The acquisition of the Wirtgen Group aligns with our long-term strategy to expand in both of John Deere’s global growth businesses of agriculture and construction,” says Samuel R. Allen, Deere & Company Chairman and Chief Executive Officer. “Wirtgen’s superb reputation, strong customer relationships and demonstrated financial performance are attractive as we expand the reach of John Deere construction equipment to more customers, markets and geographies.”

“The transaction enhances our global distribution options in construction equipment and enhances our capabilities in emerging markets. Spending on road construction and transportation projects has grown at a faster rate than the overall construction industry and tends to be less cyclical. There is recognition globally that infrastructure improvements must be a priority and roads and highways are among the most critical in need of repair and replacement,” says Max Guinn, President of Deere’s Worldwide Construction & Forestry Division.

Stefan Wirtgen, Managing Director at Wirtgen, says the Wirtgen Group has a legacy of technology and innovation with market-leading products and a strong focus on the customer. “As we looked to the future, we specifically chose Deere as the buyer because of our long-held respect for the organisation and our full confidence that Deere is dedicated to the ongoing success of the Wirtgen Group and our employees worldwide.”

“Our company’s strength and success comes from dedicated employees who are focused on helping customers succeed in the road construction industry. We believe this transaction allows the company to be successful well into the future – independent of our family ownership,” says Jürgen Wirtgen, Managing Director at Wirtgen.

Deere plans to maintain the Wirtgen Group’s existing brands, management, manufacturing footprint, employees and distribution network. The combined business is expected to benefit from sharing best practices in distribution, customer support, manufacturing and technology as well as in scale and efficiency of operations.

The transaction has been approved by Deere's Board of Directors. The purchase is subject to regulatory approval in several jurisdictions as well as certain other customary closing conditions. The companies said they expect to close on the transaction in the first quarter of Deere’s 2018 fiscal year.

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