AGCO Corporation announced that it has entered into a definitive agreement to sell the majority of its Grain & Protein business to American Industrial Partners (AIP) in an all-cash transaction valued at $700 million. The sale is subject to working capital and other customary closing adjustments.
"The divestiture of Grain & Protein supports AGCO's strategic transformation, recently accelerated by the PTx Trimble joint venture, which closed in April 2024," said Eric Hansotia, AGCO's Chairman, President, and Chief Executive Officer. "Divesting this business allows us to streamline and sharpen our focus on AGCO's portfolio of award-winning agricultural machinery and precision ag technology products, which underpins a long-term focus on high growth, high margin, and high free cash flow generating businesses."
Hansotia added, "AIP has extensive experience in the industrial sector and vast carve-out expertise, which we believe will unlock new potential for the Grain & Protein business. We believe the move will help ensure its brands continue to lead the market in grain, seed, and protein production equipment and remain well-positioned to deliver for farmers."
The transaction includes the sale of five primary Grain & Protein brands – GSI®, Automated Production® (AP), Cumberland®, Cimbria®, and Tecno®. However, AGCO's Grain & Protein business in China is not included in the sale.
AGCO plans to use the net proceeds from the transaction in line with its capital allocation priorities, including debt repayment, disciplined investment in technology and organic growth initiatives, and return of capital to shareholders.
AGCO will begin reporting Grain & Protein as held for sale in the company's consolidated financial statements for the second quarter of 2024 through the closing date. The company expects to incur a loss on the sale of the business in the range of $450 million to $475 million. The transaction purchase price implies a transaction multiple of approximately 8.3x based on Grain & Protein's trailing twelve months adjusted EBITDA as of March 31, 2024.
The transaction is anticipated to close before the end of the year, subject to regulatory approvals and other customary closing conditions.
