CNH Industrial N.V. announced Monday, June 21 that it has entered into an agreement to acquire 100% of capital stock of Raven Industries, a U.S.-based maker of precision agriculture technology. In the announcement, CNH noted the purchase price of $58 per share, which is a 33.6% premium o the Raven Industries four-week volume-weighted average stock price, and a $2.1 billion enterprise value.
The purchase will be funded by available cash on hand of CNH Industrial. Close of the deal is expected in the fourth quarter of 2021, subject to the satisfaction of customary closing conditions, including approval by Raven shareholders and receipt of regulatory approvals.
In its announcement CNH notes that the purchase builds on a long partnership between the two companies and will "further enhance CNH Industrial's position in the global agriculture equipment market by adding strong innovation capabilities in autonomous and precision agriculture technology."
In the announcement, Scott Wine, CEO CNH Industrial notes "precision agriculture and autonomy are critical components of our strategy to help our agricultural customers reach the next level of productivity and to unlock the true potential of their operations. Raven has been a pioneer in precision agriculture for decades, and their deep product experience, customer driven software expertise and engineering acumen offer a significant boost to our capabilities."
The move, Wine says, aligns with the company's commitment to enhance its precision farming portfolio and aligns with the corporate digital transformation strategy. The combination of Raven's technologies and the CNH Industrial current and new product portfolio "will provide our customers with novel, connected technologies, allowing them to be more productive and efficient."
"Our board and management are excited about this partnership and what it means for our future," comments Dan Rykhus, president and CEO for Raven Industries. "For 65 years, our company has been committed to solving great challenges. Part of that commitment includes delivering groundbreaking innovation by developing and investing in our core capabilities and technology."
He adds that coming together with CNH Industrial can further accelerate that development path and offer opportunities to customers. The Raven-CNH relationship has expanded over decades.
Wine notes that Raven Industries' capabilities and innovation culture will be part of the CNH Industrial family. "Sioux Falls is and will continue to be a true center of excellence," he says.
Raven divisions under review
Based in Sioux Falls, S.D., Raven Industries is organized into three divisions – Applied Technology (precision agriculture), Engineer Films (high-performance specialty films) and Aerostar (aerospace) with consolidated net sales of $348.4 million for the 12 months ending Jan 31. 2021. The company is a global technology partner for key strategic OEMs, agriculture retailers and dealers. The transaction is expected to generate approximately $400 million in run-rate revenue synergies by calendar year 2025, resulting in $150 million of incremental earnings before interest, taxes, depreciation and amortixation (EBITDA).
The release notes the Engineer Films and Aerostar segments are industry leaders in the high performance specialty films and stratospheric platform industries, respectively, and CNH Industrial says they represent attractive independent businesses. CNH Industrial management will undertake a strategic review of each business to best position them for future success and to maximize shareholder value.
CNH Industrial does not expect the proposed acquisition will have any impact on its guidance for 2021.
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