John Deere to acquire the Wirtgen Group for US$5.2B
June 5, 2017 - John Deere announced that it plans to acquire the Wirtgen Group, a global leader in road construction equipment, for EUR 4.357 billion (approximately US$5.2 billion).
“The acquisition of the Wirtgen Group aligns with our long-term strategy to expand in both of John Deere’s global growth businesses of agriculture and construction,” said Samuel Allen, Deere & Company chairman and CEO. “Wirtgen’s superb reputation, strong customer relationships and demonstrated financial performance are attractive as we expand the reach of John Deere construction equipment to more customers, markets, and geographies.”
The Wirtgen Group has five brands across the road construction sector spanning milling, processing, mixing, paving, compaction and rehabilitation. These include Wirtgen (milling machines and concrete paving), Vögele (asphalt paving), Hamm (compactors), Kleeman (crushers) and Benninghoven (asphalt plants). John Deere intends to retain all of the brands of the Wirtgen Group, as well as the company’s existing manufacturing footprint, management, employees and distribution network.
The Wirtgen Group, based in Germany, has approximately 8,000 employees and sells products in more than 100 countries through a large network of 150 global authorized dealers. The company has more than 50 years of operating experience.
“Wirtgen is a premium asset with a leading global market position and a record of strong financial performance,” Allen said. “We believe it fits very well with the strengths of John Deere and the priorities for the future. It aligns closely with our strategic plan that calls for expanding our global presence in construction as well as agricultural equipment. And it certainly ties with our goal of helping the world meet its increasing need for infrastructure as well as for shelter and food.”
“This transaction enhances our global distribution options in construction equipment and enhances our capabilities in emerging markets,” said Max Guinn, president of Deere’s Worldwide Construction & Forestry Division. “Spending on road construction and transportation projects has grown at a faster rate than the overall construction industry and tends to be less cyclical. There is recognition globally that infrastructure improvements must be a priority and roads and highways are among the most critical in need of repair and replacement.”
The transaction has been approved by Deere’s board of directors. The purchase is subject to regulatory approval in several jurisdictions as well as certain other customary closing conditions. The companies said they expect to close on the transaction in the first quarter of Deere’s 2018 fiscal year.
“The Wirtgen Group has a legacy of technology and innovation with market-leading products and a strong focus on the customer,” said Stefan Wirtgen, managing director at Wirtgen. “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 confidence that Deere is dedicated to the ongoing success of The Wirtgen Group and our employees worldwide.”
“Our company’s strength and success comes from dedicated employees who are focused on helping customers succeed in the road construction industry,” adds Jürgen Wirtgen, managing director at Wirtgen. “We believe this transaction allows the company to be successful well into the future - independent of our family ownership.”
June 5, 2017 By Andrew Snook
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