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Putting Precision Planting In the Hands of AGCO

When The Climate Corporation began looking for a buyer for its Precision Planting business, its goal was clear.

“Precision Planting has been recognized as an innovator and a leader as well as a company that can be agile and bring technology to the market quickly,” says Mike Stern, chief executive officer of The Climate Corporation. “Our strategy in divesting Precision Planting was to put it in the hands of a mainstream equipment company that saw the value in that and would continue to invest in the company as part of its core business. AGCO is a great partner from that perspective because it is going to allow that innovation to continue to develop and flow.”

According to Greg Peterson, AGCO was already investigating planter technology internally. Founded in 1990, this deal will allow the company to take its precision farming business to the next level. 

“We were starting to scratch the surface on our own,” says Peterson, who is director of investor relations for AGCO. “In addition, we were already partnering with Precision Planting and doing some factory installs. AGCO dealers were also installing Precision Planting products on our planters. Being able to take this one step further is a big deal for us. Acquiring Precision Planting gives us the best planting technology in the industry in terms of high-speed and variable-rate planting. More importantly, adding this brand will help our dealers because they will become one of the planting experts in their local selling area. Ultimately, I think that will help them sell machinery and other products that go right along with the planter technology.”

“I’ve been told AGCO has a sincere desire to continue to improve planter technology and learn from the Precision Planting culture of agronomic-based technology improvements,” says Rich Schlipf, who farms in Milford, Indiana, and has been a Precision Planting dealer for more than 10 years. “AGCO has been learning and testing Precision Planting products over the past couple years. It obviously sees value in what Precision Planting is doing and wants to continue to improve what it is doing. I think that is very commendable.”

This announcement from AGCO and Precision Planting comes two months after The Climate Corporation terminated its 2015 agreement to sell Precision Planting to John Deere. John Deere’s acquisition was slowed down when the U.S. Department of Justice brought legal action against Deere & Co. to block the transaction. The initial claim stated that if Deere were allowed to purchase Precision Planting, it would create a monopoly in the high-speed precision planting market as John Deere and Precision Planting were the only companies selling high-speed, precision planters.

Expanding its Global Presence

Today, most of Precision Planting’s business is in the U.S. In fact, it has about 450 Premier Dealers in the U.S. and about 100 globally who operate mainly in Brazil and Ukraine with a few in South America. As one of the leaders in the international space, AGCO is hoping to change that. Based in Duluth, Georgia, the company’s reach not only includes 1,390 dealers in North America, it also has 290 dealers in South America, 930 dealers in Europe and the Middle East, and 440 dealers in Asia-Pacific and Africa.

“Our brands and dealer network are certainly stronger outside the U.S. than they are inside the U.S.,” says Peterson. “We think this is a great opportunity to grow Precision Planting in Europe and South America. It gives our dealers another very good product to go along with what we think is some industry-leading machinery.”

Yet, with change comes concern.

“When Gregg Sauder chose to sell to Monsanto, those of us selling Precision Planting products thought it would never be the same again,” says Schlipf. “It was different, but still good. You learn to adapt to the new normal. I would expect the same to happen again. When you have a company like Precision Planting that employs great people who are passionate about what they do, they adapt to the changes and continue to do what they are passionate about – helping growers succeed. It would be my hope that AGCO will see the value of leaving Precision Planting as a stand-alone company and let it continue to do what Precision Planting does best – bring great technology to the market place fast.”

Because most of Precision Planting’s business is currently done outside of the OEM distribution network, Peterson says there is no plan to change that or the brand.

Stern adds that, “AGCO is a company that is going to value Precision Planting, invest in it, and allow the really talented people who work there to continue to innovate and bring innovation to the marketplace. It’s a really good fit.”

While it may be too early to tell how this will affect Precision Planting dealers, Schlipf says he has great confidence in Precision Planting’s leadership team. “They will make the right decisions and continue to work in the best interests of its employees and dealers.”

There is no doubt the research and development powerhouse that is Precision Planting will augment AGCO’s long-standing commitment of bringing new technology into the equipment space.

“In terms of precision farming, we want to be open architecture and partner with the best companies out there,” says Peterson. “We are eager to continue to add tools like Precision Planting to our portfolio and feel like we have some really nice opportunities ahead of us. In a lot of cases, we won’t be buying companies but rather will partner with ones like we do today such as Trimble, Topcon, Aglytix, and Farmobile. At the end of the day, we want to provide farmers with some great tools to improve their operations and, hopefully, put more money in their bank accounts.”

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