John Deere is looking to expand into the road construction machinery market, signing a definitive agreement to acquire German equipment manufacturers the Wirtgen Group.
The Wirtgen Group is a privately-held company that is one of the world’s leading manufacturers of road construction equipment.
The total value of the transaction is approximately EUR4.6 billion (A$6.8 billion).
The group consists of six brands covering virtually the entirety of the road construction sector including milling, processing, mixing, paving, compaction and rehabilitation. The group sells products under the Wirtgen, Vogele, Hamm, Kleeman, Benninghoven and Ciber brand names.
Deere & Company says it intends to maintain the existing Wirtgen Group brands, management, manufacturing facilities, employees and distribution network, as there is no overlap with the company’s existing product line.
The combined business is expected to benefit from sharing best practices in distribution, customer support, manufacturing and technology.
“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,” Deere & Co chairman and CEO Samuel R. Allen says.
“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,” Allen continues.
The transaction has been approved by Deere’s board of directors but is still subject to regulatory approval in several jurisdictions. The two companies say they expect to close on the transaction in the first quarter of John Deere’s 2018 fiscal year.
Wirtgen managing directors Stefan and Jurgen Wirtgen say they are excited about what the John Deere group can do for the Wirtgen brand worldwide.
“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,” Stefan says.
“Our company’s strength and success comes from dedicated employees who are focused on helping customers succeed in the road construction industry,” Jurgen adds.
“We believe this transaction allows the company to be successful well into the future – independent of our family ownership.”