CNH digs deeper agricultural furrow with $ 2.1 billion purchase of Raven, Auto News, ET Auto
By Giulio Piovaccari
MILAN: CNH Industrial has reached $ 2.1 billion deal to buy Raven Industries to bolster its agricultural equipment business, as Italian-American automaker prepares to divest its trucks, buses and engines.
Raven stock rose 50% in New York on Monday morning, bringing its market cap in line with terms offered by CNH Industrial, whose Milan-listed stock turned slightly positive after initially falling 5.6%.
CNH Industrial is the second largest agricultural equipment manufacturer in the world after John Deere, operating under the New Holland, Case IH and Steyr brands.
“Precision farming and self-reliance are essential parts of our strategy,” said Scott Wine, managing director of CNH Industrial, of the acquisition of Raven, which also produces high-performance specialty films as well as aerospace and defense solutions.
Wine has called the proposed purchase “truly transformative” and has left the door open for further acquisitions to expand what it is able to offer in the businesses it retains.
“We will definitely consider strategic acquisitions if we are to grow faster or more profitably,” he told analysts.
CNH Industrial will pay $ 58 per share for the U.S. agricultural technology company, a 33.6% premium over Raven’s four-week volume-weighted average price, giving it an enterprise value of 2. $ 1 billion, the companies said.
The deal is expected to generate around $ 400 million in current rate revenue synergies by 2025, resulting in an additional $ 150 million in core earnings (earnings before interest, taxes, depreciation and amortization), they added.
Bestinver Securities analysts said the news was positive as Raven’s “cutting edge” technology in agriculture would further enhance CNH Industrial’s capabilities.
“However, we stress that the acquisition was made at cost,” they said in a note.
CNH Industrial has announced that it will complete a plan to split and separate listing of its low-margin Iveco truck and bus units as well as its FPT engine division early next year to increase value assets and streamline operations.
It will also keep its construction equipment business after the split.
The purchase of Raven, which marks the largest M&A transaction for CNH Industrial since its inception in 2013, requires approval from Raven shareholders. It is expected to close in the fourth quarter and will be funded by CNH’s available cash, the companies said in a joint statement.
CNH Industrial, which is controlled by the Italian family Agnelli through its holding company Exor, said it did not expect the proposed acquisition to impact its financial forecast for this year, including cash flows. cash.
Barclays and Goldman Sachs were CNH Industrial’s financial advisers in the matter, while JPMorgan Securities advised Raven Industries.