John Deere has announced its largest acquisition to date with Wirtgen. The deal is worth over $5 billion for adding some German expertise. There is a strong strategic and financial rationale behind the deal, as the transaction could create a lot of value for John Deere in the coming years.
John Deere has decided to acquire family-owned Wirtgen Group which is a key player in the road construction equipment market. With this deal going through, Deere will add 5 premium brands to its construction equipment business. The good thing about the deal is that there is no direct product overlap with the existing range of product portfolio. Wirtgen is active in more than 100 countries and employs about 8,000 workers. The products are sold through its own network of dealers as well as independent dealers in respective territories.
Wirtgen owns and markets three road equipment brands which make up 84% of total sales. This includes Wirtgen’s name brand, Vogele and Hamm. These brands produce milling machines, concrete paving machines, compactors and asphalt paving machines. The company has a smaller mineral technologies business as well responsible for the remainder of sales, generated by production of asphalt plants and crushers. The overall business is well-diversified and has operations spread across majorly in Europe, North America and the wider Asian region.