US farm machinery giant aiming to establish leadership position in road construction equipment
DEERE & Company (John Deere), the Illinois-based agricultural equipment manufacturers, have signed a definitive agreement to acquire the Wirtgen Group for €4.357 billion in cash. Including debt and other considerations, the total enterprise value for the deal is €4.6 billion (US$5.2 billion).
Headquartered in Germany, the Wirtgen Group have five premium brands across the entire road construction machinery sector – Wirtgen, Vögele, Hamm, Kleemann and Benninghoven – spanning milling, processing, mixing, paving, compaction and rehabilitation.
The Group has a global footprint with approximately 8,000 employees and sell products in more than 100 countries through a network of company-owned and independent dealers. In 2016, the Wirtgen Group achieved sales of €2.6 billion.
Deere say Wirtgen’s highly complementary product portfolio will enhance their existing construction equipment offering and establish Deere as an industry leader in global road construction.
‘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,’ said Samuel R. Allen, chairman and chief executive officer of Deere & Company.
‘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.’
Max Guinn, president of Deere’s Worldwide Construction & Forestry Division, said: ‘This 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.’
Stefan Wirtgen, managing partner at Wirtgen, said: ‘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 organization and our full confidence that Deere are dedicated to the ongoing success of the Wirtgen Group and our employees worldwide.’
Managing partner Jürgen Wirtgen added: ‘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.’
Deere say they plan 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 is subject to regulatory approvals as well as certain other customary closing conditions. The companies expect to close the transaction in the first quarter of Deere’s 2018 fiscal year.