Deere & Company (NYSE:DE) , the world’s largest farm equipment manufacturer, has recently entered into a definitive agreement to acquire King Agro, a privately-held manufacturer of carbon fiber technology products. Financial terms of the transaction have not been disclosed.
King Agro is a family-owned business with headquarters at Valencia, Spain, and a production facility in Campana, Argentina. In agriculture, the company has targeted innovative designs that improve productivity and lower costs.
The Deere - King Agro alliance dates back to 2015 when both companies decided to develop and distribute carbon fiber booms for the John Deere application equipment in agriculture. The deal offered significant advantages of carbon fiber's versatility, strength and durability in self-propelled spraying equipment to growers.
Post acquisition, Deere’s customers will benefit from King Agro's unique knowledge, designs, and expertise in carbon fiber technology. King Agro will retain its brand name, trademark, and commercial relationships post closure of the deal.
Acquisitions to Drive Growth
Deere has been active on the acquisition front, of late. In December 2017, the company acquired the leading global road-construction equipment maker — Wirtgen — for $5.2 billion in cash and debt. This buyout will enable Deere’s North America-centric construction business to expand globally and also catapult it to the position of an industry leader in road construction.
In September 2017, Deere acquired Sunnyvale, CA-based Blue River Technology, a pioneer in bringing machine learning to agricultural spraying equipment. Blue River’s technology has aided precision agriculture by shifting farm-management decisions from the field level to the plant level.
Moreover, Deere is poised to gain from higher housing starts in the United States, stabilizing oil prices and strong order activity.
Share Price Performance
Deere has outperformed its industry with respect to price performance in a year’s time. The stock has appreciated around 38%, while the industry has recorded growth of 32% during the same time frame.
Zacks Rank and Other Key Picks
Currently, Deere carries a Zacks Rank #2 (Buy).
Other top-ranked stocks in the same space include Dover Corporation (NYSE:DOV) , W.W. Grainger, Inc. (NYSE:GWW) and H&E Equipment Services, Inc. (NASDAQ:HEES) . While, Dover and Grainger sport a Zacks Rank #1 (Strong Buy), H&E Equipment carries the same rank as Deere. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dover has a long-term earnings growth rate of 13%. Its shares have rallied 14%, over the past six months.
Grainger has a long-term earnings growth rate of 9.7%. The company’s shares have been up 55.8% during the same time frame.
H&E Equipment has a long-term earnings growth rate of 14.4%. The stock has gained 62% in six months’ time.
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