CORRECTED, March 30, 2016 — Reuters — Deere and Co. said on Tuesday it has acquired a majority stake in Hagie Manufacturing, allowing the farm equipment manufacturer to take a greater position the high-clearance sprayer market.
High-clearance sprayers, which allow farmers to spray fertilizers and pesticides in-crop later in the growing season, are “a new market for Deere,” said John May, Deere’s chief information officer, in a release Tuesday.
“The expertise at Hagie allows John Deere to immediately serve customers who need precision solutions that extend their window for applying nutrients.”
Hagie, a leading U.S. crop sprayer manufacturer, employs about 400 people at its manufacturing plant at Clarion, Iowa, about 150 km north of Des Moines. It will continue to make sprayers under the Hagie brand but with no dealerships, the company will have access to Deere’s global customers.
“It is notable that Hagie basically put itself on sale, because they had a financial advisor involved,” said Jim Corridore, analyst at S+P Global Market Intelligence.
NCP, Inc., a Des Moines investment bank, was the exclusive financial advisor to Hagie. Neither Deere nor NCP would comment on the size of the deal.
“The fact that they were looking to get an investor involved, they probably needed the funds given how bad the sector has been and for how long it has been bad,” Corridore said.
The joint venture is another sign of consolidation in the agriculture sector as the U.S. farm economy enters its third-straight down year.
Deere and other agriculture equipment manufacturers have continued to invest millions in acquisitions, research and development even as demand for farm equipment and machinery tapers off in the wake of the weakest U.S. farm economy in 30 years.
In November, Deere said it would purchase Monsanto’s Precision Planting farm equipment business and run it as a independent subsidiary. The farm machinery market has moved more toward precision agriculture, a process that allows farmers to measure and manage precise amounts of inputs, such as seed, fertilizer and pesticide, in an effort to keep costs low.
The agreement allows Deere to add precision technology to Hagie sprayers, and allows Deere to provide a “broader range of sprayer options,” Deere said.
Hagie’s sales and service are to be integrated into Deere’s global distribution channel over the next 15 months, Deere said.
Due to slowed agriculture equipment sales in the wake of the sluggish farm economy, Deere has already announced hundreds of layoffs from its own facilities.
“We are encouraging our independent dealers to consider employing Hagie field staff for their expertise in high clearance sprayers,” a Deere spokesperson said.
— Reporting for Reuters by Meredith Davis in Chicago. Includes files from AGCanada.com Network staff.
CORRECTION, March 30, 2016: An earlier version of this article stated Deere does not currently produce a high-clearance sprayer.