(Reuters) - Deere & Co. (DE.N) shares rose about 2 percent on Monday after the company said it plans to acquire Monosem, a European family-owned farm equipment manufacturer that specializes in “precision planters” designed to increase crop production.
Deere would not comment on the transaction’s financial details or Monosem’s revenues, but it does expect the deal to close in the first quarter of fiscal 2016, which began on Nov. 1, Deere spokesman Ken Golden wrote in an e-mail.
Monosem specializes in “precision planters” a technologically advanced process in which farmers can specify seed planting depths by each crop row. According to Monosem’s website, the company exports about 70 percent of its planters and cultivators to more than 70 countries. Deere’s Golden said Monosem employs about 350 people worldwide, mostly in France.
Despite the weakest U.S. farm economy in nearly 30 years, Deere and other equipment manufacturers, including AGCO (AGCO.N) and CNH Industrial (CNHI.MI), are investing millions in research and development and data gathering applications to add “precision planting” products to their portfolios.
As demand for machinery tapers off because of a sluggish farm economy, manufactures have made big bets that customers will want to add “precision farming” capabilities to their crop production process.
“The whole ag machinery market is moving toward precision planting,” said Stehpen Volkmann, analyst at Jefferies.
Moline, Illinois-based Deere posted about $22 billion in revenue and sales for the nine months ended July 31, down from $27 billion in same time period a year ago. The company reports its fiscal fourth quarter on November 25.
The deal includes Monosem’s four facilities in France and two U.S. facilities in Edwardsville, Kansas and Ithaca, Michigan. Deere said Monosem will retain its own brand and trademark.
Reporting By Meredith Davis; editing by Grant McCool