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Deere agrees to acquisition of Monosem

Source: chicagotribune.com

Deere & Co. has agreed to acquire Monosem, the European leader in precision planter manufacturing, as the world’s largest producer of agricultural machinery seeks to boost technology that improves farmers’ productivity.

Acquiring Monosem, which makes planters that can be customized for tillage style, inputs and row spacing, “positions John Deere to serve more customers worldwide,” John May, chief information officer of the Moline, Illinois-based company, said in a statement. The terms of the deal, which will include four facilities in France and two in the U.S., weren’t disclosed.

The acquisition “shows that Deere takes both the market opportunity and the emerging competitive landscape seriously”, commented Larry De Maria, a New York-based analyst for William Blair & Co. “Given the lower commodity prices and relatively weak farm economy for equipment, this begins to move Deere beyond traditional precision agriculture, which will provide a different set of commercial opportunities,” added De Maria.

Deere is facing a third straight year of falling revenue and earnings per share in the fiscal year that started this month as sales of farm equipment such as combines and tractors continue to drop around the globe because of lower crop prices.

Farm equipment sales will likely be “dismal” in 2016 as weak markets and an inventory glut weigh on the industry, said Bloomberg Intelligence analysts Christopher Ciolino and Karen Ubelhart in a report from October. Soybean and wheat futures have tumbled 13% this year in Chicago.

The “next revolution in productivity and yield improvement for farming” will come from greater use of technology by seed companies, equipment manufacturers, agronomists, crop consultants, service providers and growers, De Maria said in a report on precision agriculture in May.

De Maria said lower commodity prices will create a “greater need for technology innovation and adoption in the future, leading to a complete digitally integrated farm.”

Monosem has been family-owned since it was founded in 1948.

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