Joint Venture to Accelerate Innovation in
Factory-Fit and Aftermarket Solutions to Benefit Farmers Across the
Globe
Transaction to Simplify and Accelerate
Trimble's Focus on its Connect and Scale Strategy
WESTMINSTER, Colo., Sept. 28,
2023 /PRNewswire/ -- Trimble (NASDAQ: TRMB)
announced today a definitive agreement to form a joint venture (the
"JV") with AGCO (NYSE: AGCO) to better serve farmers with factory
fit and aftermarket applications in the mixed fleet precision
agriculture market. Trimble and AGCO's shared vision is to create a
global leader in mixed fleet smart farming and autonomy
solutions.
In aggregate, Trimble expects approximately $3 billion in value from the transaction from
pre-tax cash proceeds, Trimble's 15 percent stake in the joint
venture, and the related commercial agreements.
Under the terms of the JV, Trimble will contribute its precision
agriculture business ("Trimble Ag")
excluding certain Global Navigation Satellite System ("GNSS") and
guidance technologies and AGCO will contribute its JCA Technologies
business, which is a leader in the development of autonomous
software for agricultural machines, implement controls and
electronic system components. Trimble will receive $2 billion in pre-tax cash proceeds plus a 15%
stake in the JV. In addition, the parties will enter into (i) a
long-term Supply Agreement through which Trimble will provide the
JV with key GNSS and guidance technologies ("Supply Agreement"),
(ii) a Technology Transfer and License Agreement ("TTLA") to govern
the licensing of Trimble trademarks and technology for use by the
JV after the expiration of the Supply Agreement and (iii) a
Positioning Services Agreement through which the JV will serve as a
channel partner to Trimble for its positioning services in the
agriculture market (collectively, the "Commercial Agreements").
Delivering a Leading Portfolio of Agriculture
Technologies
The JV will align two leading companies dedicated to serving
farmers worldwide with cutting-edge technologies to help farmers
drive productivity, efficiency and sustainability. For
customers, the JV's technology is expected to offer seamless
integration and connectivity across geographies, equipment brands
and the crop life cycle. For dealers, it is expected to better
serve farmers with a broad, complementary, and leading technology
portfolio.
"Farmers today are looking for mixed fleet solutions across
their tractors and the implements that they use to most efficiently
and sustainably feed the world. We believe a joint venture with
AGCO, complemented by the successful mixed fleet approach that they
have developed with their Precision Planting business model, can
help us better serve farmers and OEMs together," said Rob Painter, Trimble's president and chief
executive officer. "Trimble has a rich history of forming and
cultivating joint ventures with industry leaders such as
Caterpillar, Nikon and Hilti and we are excited about this
opportunity with AGCO and its family of leading brands. We look
forward to beginning a new chapter with AGCO to bring precision
agriculture to both the factory and to the aftermarket."
"The exclusive access to Trimble
Ag products, combined with AGCO's existing Precision Ag
offerings, accelerates AGCO's growth ambitions around autonomy,
precision spraying, connected farming, data management and
sustainability," said Eric Hansotia
Chairman, President and CEO of AGCO Corporation. "All of these
touchpoints will result in our team being even more farmer
focused."
Transaction Expected to Result in a Stronger, More Focused
Trimble
Following completion of the transaction, Trimble will continue
to deliver its differentiated technologies at the intersection of
the physical and digital worlds across its core businesses.
The transaction is expected to result in significant benefits to
Trimble, including:
Simplifies Connect and Scale Strategy
- Streamlines portfolio and increases focus on priority growth
areas
- Reduces exposure to hardware-centric agriculture market while
retaining highly recurring revenue Positioning Services
business
- Retains core GNSS IP and will continue to innovate and offer
across served markets, including the JV
Enhances Financial Profile and Flexibility
- Results in a higher mix of software, services and recurring
revenue from 66% to 72% on a pro forma basis
- Results in a higher mix of recurring revenue from 49% to 55% on
a pro forma basis
- Over $1.5 billion in net proceeds
after tax used to repay $1.1 billion
in debt and repurchase shares
De-risks Trimble's Channel Transition in the Agriculture
Market
- Provides opportunity to partner with a leading OEM focused on
serving the mixed fleet across the globe
- Comprehensive plan with a major OEM provider reduces
uncertainties from the Trimble aftermarket channel transition
- Maintains ongoing participation in a leading Precision Ag
asset
Trimble Financial Details
Trimble's precision agriculture business, which has historically
been reported as part of Trimble's Resources and Utilities
reporting segment, is expected to generate fiscal 2023
revenues of approximately $535
million and Adjusted EBITDA of approximately $185 million as part of Trimble. For comparative
purposes, after giving effect to the transaction as if it had
occurred on the first day of fiscal 2023, Trimble estimates that it
would have generated approximately $65
million of revenue and approximately $15 million of Adjusted EBITDA from the Supply
Agreement.
Following the launch of the joint venture, Trimble's 15 percent
interest in the net profits of the joint venture will be included
in Trimble's income from equity method investments, net. For
comparative purposes, after giving effect to the transaction as if
it had occurred on the first day of fiscal 2023, Trimble estimates
that it would have earned approximately $25
million of equity income from its stake in the JV.
Trimble's Resources and Utilities segment also includes (i)
forestry solutions used in the global forest supply chain, (ii)
utilities software and solutions used to enable geospatial-centric
enterprise asset management and (iii) positioning services which
enables precision GNSS positioning and includes recurring revenue
encompassing CenterPoint RTX, RangePoint RTX and ViewPoint RTX,
which will remain with Trimble following the transaction in
addition to revenue and income from the Supply Agreement with the
JV.
Timing and Approvals
The transaction is expected to close in the first half of 2024,
subject to customary closing conditions including regulatory
approvals.
Investor Conference Call
Trimble will hold a conference call on Sep. 28, 2023 at 12:30
p.m. ET to discuss the joint venture. An accompanying slide
presentation will be made available on the "Investors" section of
the Trimble website, www.trimble.com, under the subheading "Events
& Presentations." The call will be broadcast live on the web at
http://investor.trimble.com. Investors without internet access may
dial into the call at (888) 660-6347 (U.S.) or (929) 201-6594
(international). The conference ID is 1043223. The replay will also
be available on the web at the address above.
Advisors
Centerview Partners LLC is acting as exclusive financial advisor
to Trimble, and Skadden, Arps, Slate, Meagher & Flom LLP is
serving as legal counsel to Trimble.
Morgan Stanley & Co. LLC is acting as exclusive financial
advisor to AGCO. Simpson Thacher & Bartlett LLP is acting as
legal advisor to AGCO, and Troutman Pepper Hamilton Sanders LLP is
acting as its financing counsel.
About Trimble
Dedicated to the world's tomorrow, Trimble is a technology
company delivering solutions that enable our customers to work in
new ways to measure, build, grow and move goods for a better
quality of life. Core technologies in positioning, modeling,
connectivity and data analytics connect the digital and physical
worlds to improve productivity, quality, safety, transparency and
sustainability. From purpose-built products and enterprise
lifecycle solutions to industry cloud services, Trimble is
transforming critical industries such as construction, geospatial,
agriculture and transportation to power an interconnected world of
work. For more information about Trimble (NASDAQ:TRMB),
visit: www.trimble.com.
About AGCO
AGCO (NYSE:AGCO) is a global leader in the design, manufacture,
and distribution of agricultural machinery and precision ag
technology. AGCO delivers customer value through its differentiated
brand portfolio, including core brands like Fendt®, GSI®, Massey
Ferguson®, Precision Planting®, and Valtra®. Powered by Fuse® smart
farming solutions, AGCO's full line of equipment and services help
farmers sustainably feed our world. Founded in 1990 and
headquartered in Duluth, Georgia,
USA, AGCO had net sales of approximately $12.7 billion in 2022. For more information,
visit www.AGCOcorp.com. For company news, information, and events,
please follow AGCO on Twitter: @AGCOCorp. For financial news on
Twitter, please follow the hashtag #AGCOIR.
Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, which are made pursuant to the safe harbor provisions of
the Securities Litigation Reform Act of 1995, including, but not
limited to, statements regarding the planned formation of the joint
venture and the timing thereof, the value and benefits to Trimble
of the joint venture and the Commercial Agreements, the use of
proceeds and the development of substantial technology synergies
over time, and the business performance and financial results of
each of the joint venture and Trimble following the transaction.
These forward-looking statements are subject to change, and actual
results may materially differ from those set forth in this news
release due to certain risks and uncertainties. Factors that could
cause or contribute to changes in such forward-looking statements
include, but are not limited to (i) the failure to realize the
anticipated benefits of the formation of the joint venture, (ii)
that the closing of the transaction is subject to conditions which
may not be satisfied or may take longer to be satisfied than
expected, (iii) that the benefits from the long-term Supply
Agreement and other Commercial Agreements to the joint venture will
be dependent upon the joint venture's ability to successfully
develop and market products, (iv) the failure to realize the
benefits of Trimble's non-controlling stake in the joint venture,
(v) unanticipated difficulties in separating the precision
agriculture business, (vi) unanticipated factors affecting the cost
of operating the joint venture as a standalone business, (vii)
inability to successfully integrate AGCO's JCA Technologies
business into the joint venture, (viii) that the use of proceeds
may be affected by market conditions and alternative uses which
become more attractive over time, (ix) that the development of
technology synergies will depend on the level of research and
development spending and the success of future innovation, and (x)
the failure to obtain governmental or regulatory approval that may
be required for the proposed transaction, or that, if such approval
is obtained, the approval is obtained subject to unexpected
conditions. The foregoing review of important factors should not be
construed as exhaustive and should be read in conjunction with the
other cautionary statements set forth in reports filed with the
SEC, including Trimble's current reports on Form 8-K, quarterly
reports on Form 10-Q and its annual report on Form 10-K, such as
statements regarding changes in economic conditions and the impact
of competition. Undue reliance should not be placed on any
forward-looking statement contained herein. These statements
reflect Trimble's position as of the date of this news release.
Trimble expressly disclaims any undertaking to release publicly any
updates or revisions to any statements to reflect any change in
Trimble's expectations or any change of events, conditions, or
circumstances on which any such statement is based.
Use of Non-GAAP Financial Information
When Trimble provides its expectations for the impact the joint
venture will have on Trimble's revenue and Adjusted EBITDA on a
forward-looking basis, a reconciliation of the differences between
non-GAAP expectations and the corresponding GAAP measures is not
available without unreasonable effort. The variability of the items
that have not yet been determined may have a significant, and
potentially unpredictable, impact on Trimble's future GAAP
results.
Additional financial information about Trimble's use of Non-GAAP
can be found on the Investor Relations page of the Trimble website
at https://investor.trimble.com/financial-information.
FTRMB
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