John Deere has announced plans to acquire German equipment manufacturer Wirtgen Group for $5.2bn following the signing of a definitive agreement on the all-cash deal between the companies.
Deere will fund the acquisition through a combination of cash and debt, and – though the purchase remains subject to regulatory approval – the transaction is expected to close before the end of 2017.
Deere does not currently manufacture any road building equipment, and so the acquisition of Wirtgen Group, one of the world’s leading manufacturer in the segment represents as significant diversification of the US group’s business scope.
“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 is dedicated to the ongoing success of the Wirtgen Group and our employees worldwide,” said Stefan Wirtgen, co-MD for Wirtgen.
“We believe this transaction allows the company to be successful well into the future — independent of our family ownership,” added Jürgen Wirtgen, the other co-MD for Wirtgen.
Deere likewise highlighted Wirtgen’s role as “an industry leader in global road construction”, as well as its footprint in 100 countries and “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,” said Samuel Allen, chairman and CEO of John Deere.
“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 Construction & Forestry division, added that the deal is a valuable move into emerging markets, where “spending on road construction and transportation projects has grown at a faster rate than the overall construction industry and tends to be less cyclical”.
Globally, he added: “There is recognition that infrastructure improvements must be a priority and roads and highways are among the most critical in need of repair and replacement.”
Wirtgen’s roots stretch back 56 years to 1961, but the group as it is known today began to take form in the late 1990s, when the company acquired Hamm and Vögele.
Since then the Wirtgen umbrella has expanded to include five brands, with the additions of Kleemann, Benninghoven and Ciber.
