Equipment World Digital Magazine
Issue link: http://read.dmtmag.com/i/846046
D eere & Company's planned purchase of Wirtgen Group is the culmination of more than a decade of relationship building, the alignment of recent strong financial performances by Deere and a deci- sion by brothers Stefan and Jürgen Wirtgen to exit the family business. The two companies signed a defini- tive agreement on the all-cash deal that will see Deere purchase the road equipment maker for $4.87 billion. When Wirtgen's debts and other considerations are factored in, the total purchase price jumps to $5.2 billion. Deere says it plans to fund the acquisition through a combination of cash and debt. The purchase is subject to regulatory approval, but Deere expects the transaction to close before the end of 2017. The Wirtgen Group's roots stretch back 56 years to the original Wirtgen brand's founding in 1961. But it wasn't until the late 1990s that the company took on its multi- brand identity with the acquisi- tion of Vögele and Hamm. Since then the Wirtgen umbrella has expanded to in- clude five brands with the additions of Kleemann, Benninghoven and Ciber. Deere, which does not cur- rently manufac- ture any road building equipment such as pavers and compaction equipment, calls the Wirtgen Group the "leading manufacturer worldwide of road construction equipment" and notes that the acquisition will infuse into Deere five brands that cover a wide range of road construction applica- tions, including milling, processing, mixing, paving, compaction and rehabilitation. The deal will make Deere the first manufacturer to have crushing and screening, as well as mobile equip- ment, under one company. "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 con- fidence that Deere is dedicated to the ongoing success of the Wirtgen Group and our employees world- wide," says Stefan Wirtgen, a manag- ing director for the Wirtgen brand. "We believe this transaction allows the company to be successful well into the future – independent of our family ownership," added fellow Wirtgen brand managing director Jür- gen Wirtgen. Deere Chairman and CEO Sam Allen says the company identified Wirtgen as an attractive strategic fit for its construction business more than a decade ago. "While head of the C&F (Construc- tion & Forestry) division in the mid- 2000s, I met with the Wirtgen family to discuss the possibility of pursuing strategic opportunities such as this one, and we stayed in close touch ever since," Allen explains. Since that time, Deere watched the company develop "into a global leader outpacing competitors with its superior product technology and exceptional customer relationships." "Then, when Stefan and Jürgen Wirtgen decided to sell their business and move on to other opportunities, they reached out to Deere and we were honored they did," he adds. "We're glad from a timing standpoint, but this is just something that we stra- tegically have had in mind for quite some time, and in the absence of a financial crisis, we would have gone ahead and pulled this trigger, because of how attractive it is." Wirtgen Group reported sales of roughly $2.9 billion in in fiscal year 2016, which ended Dec. 31, 2016, and has forecast sales of roughly $3.4 billion for FY2017. So beyond the financial contribu- tion, which Deere expects to be posi- tive within the first year, Wirtgen's road construction equipment lineup also matches a growing sector in con- struction, according to Max Guinn, EquipmentWorld.com | July 2017 13 reporter | staff report Deere & Company's purchase of Wirtgen Group part of long-range plan and entrance into paving business Vögele Super 1700-3i, the Wirtgen Group's brand highway class paver recently launched for North America.