Trimble (TRMB) To Buy Muller To Boost Agriculture Management

Trimble Navigation Ltd. (NASDAQ:TRMB) , an original equipment manufacturer of positioning, surveying and machine control products, recently agreed to acquire Muller-Elektronik, a precision agriculture company.

The financial details of the deal have been kept under wraps. The deal is expected to close in the third quarter of 2017, subject to customary closing conditions and clearance by German regulators.

The company’s shares increased 52.2% in the last two years compared with the Zacks categorized Electronic Products Miscellaneous industry’s gain of 24.2%. This was largely backed by the company’s aggressive merger and acquisition strategy.

Muller-ElektronikAcquisition Complements Trimble’s portfolio

Acquisitions have helped Trimble in building a comprehensive portfolio, entering new markets and generating additional revenues.

Muller-Elektronik is a German-based company which specializes in implement control and precision farming solutions. The company develops Electronic Control Units (ECUs) and embedded software solutions which help machines to work in the most effective way, regardless of any manufacturer.

These solutions allows one terminal to control several machines like tractors, combine harvesters, field sprayers, drill machines, among others, to improve the management of important inputs such as seed, fertilizer and pesticides. Currently, Muller’s implement control solutions are being used by leading agriculture OEMs and aftermarket channels.

The acquisition, effective immediately, will extend Trimble’s capabilities in serving its customers in the agriculture business. The deal will focus on advanced technologies and implementation solutions for better agriculture management. It will enable the development of precision agriculture solutions for farmers, allowing them to integrate and use varied hardware and software products.

Post acquisition, Muller-Elektronik businesses will become a part of Trimble's Resources and Utilities Segment.

Bottom Line

The acquisitions are part of Trimble’s bid to expand its international business. while sustaining its focus on commercial applications. These being more macro-sensitive, allow a stable revenue stream and better profits.

Trimble has added a large number of companies in the last few years. In 2014, 2015 and 2016, it acquired 10, five and three companies, respectively, as well as important assets of several others to complement its current business and capabilities.

These acquisitions are small in comparison to Trimble, so there have been no integration issues. Rather, the acquisitions facilitated market expansion and revenue buildup. The company also forms joint ventures to build positions in strategic areas. We expect acquisitions to remain an important growth driver going ahead.

Other Stocks to Consider

Currently, Trimble has a Zacks Rank #2 (Buy). Some other stocks worth considering in the broader technology sector include KLA-Tencor (NASDAQ:KLAC) and Applied Materials (NASDAQ:AMAT) , each sporting a Zacks Rank #1 (Strong Buy), while Advanced Energy Industries, Inc. (NASDAQ:AEIS) , carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

KLA-Tencor delivered a positive earnings surprise of 11.55%, on average, in the last four quarters.

Applied Materials delivered a positive earnings surprise of 3.35%, on average, in the trailing four quarters.

Advanced Energy Industries, Inc. delivered a positive earnings surprise of 10.46%, on average, in the trailing four quarters.

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