CNH Industrial Acquires Raven Industries to Enhance Autonomous and Precision Agriculture Technology

CNH Industrial plans to acquire 100% of the capital stock of Raven Industries at 58 USD per share, accounting for a 33.6% premium to the Raven four-week volume-weighted average stock price.

 

The Acquisition 

According to CNH, this acquisition is expected to close in the fourth quarter of this year. The deal is subject to the approval of receipt of regulatory approvals, Raven shareholders, and other customary closing conditions. 

 

Raven Industries' autonomous agricultural machinery. Image used courtesy of Raven Industries

 

The company plans to fund the transaction with available cash on hand and does not expect the deal will impact the financial guidance for 2021.

The proposed acquisition marks one of the largest deals for CNH. By 2025, this deal is expected to generate approximately 400 million USD of run-rate revenue synergies. As Reuters reported, the company believes this could result in 150 million USD of incremental core profits (earnings before taxes, interest, amortization, and depreciation).

 

CNH Industrial and Raven Industries

CNH Industrial is a multinational corporation based in the U.K. and controlled by Italy's Agnelli family through its investment company, Exor. CNH has a global presence and offers a range of products in the capital goods sector.

The company has individual brands representing its specific industrial sectors, including Iveco, FPT Industrial, Case IH, New Holland Agriculture, and Steyr for tractors and agricultural machinery.

 

Some of CNH Industrial's machines in a field. Image used courtesy of CNH Industrial

 

Raven Industries was founded in 1956 and headquartered in Sioux Falls, South Dakota. Raven is divided into three business segments, engineered films (high-performance specialty films), applied technology (precision agriculture), and Aerostar (aerospace and defense solutions). The 12-month consolidated net sales for the company is 348.4 million USD by January 31, 2021, and the annual revenues for the applied technology division are around 165 million USD.

As one of the largest agriculture equipment makers out there, CNH has a long partnership with Raven for technology development.

 

Enhancing Autonomous and Precision Agriculture Technology

Autonomy and precision agriculture are crucial components of CNH's strategy to help improve productivity and operation for agricultural customers, according to Scott Wine, Chief Executive Officer, CNH Industrial. 

The company claimed that the proposed Raven takeover would further enhance its position in the worldwide agriculture equipment market by boosting its innovation capabilities in precision farming and digital transformation technologies. Raven has been a leader in this field for decades, with engineering insight, deep product experience, and customer-driven software expertise, Wine mentioned.

Combining Raven's technologies and CNH's product portfolio, this proposed deal hopes to create novel, connected technologies and more integrated autonomous and precision solutions for productivity, profitability, and sustainability. Together, the two companies hope to shape the future of agriculture, Wine added.

This deal aligns with CNH's strategy of investing in advanced agriculture technologies and opens new acquisition opportunities for the company to expand its business. According to Yahoo Finance, in early 2022, CNH plans to spin off its truck and bus units, along with an engine division, to streamline operations and enhance asset values. 

It's clear that automation is continuing to make its way into every crevice of the industry, and agriculture will not be left behind.