“Even though we’re terminating the deal, from a customer perspective, nothing is going to change…”
Photo by Ben Potter
Opposition from the U.S. Justice Department convinced Monsanto to cancel a 19-month-old deal for its subsidiary Climate Corporation to sell Precision Planting to Deere & Company, officials announced Monday.
Monsanto officials issued a statement Monday afternoon that said the decision was “driven by the delay in closing due to Department of Justice concerns with the transaction.”
Mike Stern, CEO of Climate Corporation, on Monday called the split “amicable but disappointing.”
“This is totally due to delays and a lack of clarity from the Justice Department,” he said in an interview with AgWeb. “We did not see a clear path that the DOJ would approve this deal.”
John May, John Deere’s president of agricultural solutions, also called the outcome disappointing.
“We remain confident that the acquisition would have benefited customers,” he said in a prepared statement. “With an opportunity to see this to conclusion, we believe it would have been clear the challenge to the transaction was based on flawed assessments of the marketplace.”
The DOJ filed a lawsuit in August seeking to block the deal, claiming it could lower competition for farmers and raise prices, conclusions the companies involved have denied. The DOJ claimed in court papers that Deere and Precision Planting would hold up to 86% of the market of all high-speed precision planting sales in the U.S. The transaction price was estimated at around $190 million.
Climate’s Stern said Monday the company will pursue a new buyer – preferably another farm equipment manufacturer – and is already in talks with several third parties.
“We think Precision Planting would do better with an equipment developer and manufacturer moving forward,” he said. “The Climate Corporation made the strategic decision nearly 18 months ago to focus its business exclusively on its digital agriculture platform, and that strategy has not changed.”
Existing Climate FieldView customers who use John Deere’s Wireless Data Server technology will continue to be able to do so. Stern points out that while about 70% of existing FieldView drives are installed on John Deere planters and harvesters, that technology was never brand-exclusive and will continue in that manner.
“Even though we’re terminating the deal, from a customer perspective, nothing is going to change,” he says.
Two other agreement related to Deere’s purchase of Precision Planting will be terminated, too. A digital collaboration agreement between Deere and Climate Corporation will end, as will a distribution agreement with Ag Leader.