Agco has completed a deal to sell the majority of its Grain and Protein business division, including its grain bin and handling equipment arm GSI, to American Industrial Partners for a reported US$700 million.
Why it matters: The company says it plans to focus on precision agriculture products and machinery.
”The divestiture of Grain and Protein supports Agco’s strategic transformation, recently accelerated by the PTx Trimble joint venture, which closed in April 2024,” Agco CEO Eric Hansotia said in a release.
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“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.”
Agco expects to use cash from the sale for debt repayment, further investment in technology, as well as “organic growth initiatives and return of capital to shareholders.”
The sale includes five Agco-owned brands: GSI, livestock housing systems brands Automated Production, Cumberland and Tecno, and grain processing equipment brand Cimbria. It does not include Agco’s Grain and Protein business in China.
Agco launched a “strategic review” of the Grain and Protein division last September, at the same time as it announced it would contribute its JCA Technologies business to the PTx Trimble precision agriculture joint venture.
At the time, it said it would “assess all strategic options to ensure the Grain and Protein customers are serviced in the best way possible, and that the business is best positioned to maximize its full potential.”
GSI, which started in the steel grain bin business in Illinois in 1972, was sold in 2005 and again in 2007 to U.S. private equity buyers before Agco picked up the company for US$928 million in 2011. By then the GSI Group included the Cumberland and AP brands, among others.
Cimbria, which started as an agricultural machinery manufacturer in Denmark in 1947, today makes equipment for the food, feed and seed processing sectors. Tecno is an Italian company making housing systems for layer hens. Both were sold to Agco in 2016.
Agco said it expects to incur a loss on the sale of the Grain and Protein business, in the range of US$450 million-$475 million. The deal is expected to close by the end of the year.
The buyer, American Industrial Partners, is a New York-based private equity firm, with stakes in industrial tech and manufacturing businesses including Ontario precision engineering technology firm Virtek.
