Brazilian agribusiness company AGCO agreed to buy a 85% stake in the agriculture division of US technology firm Trimble and said it will finance the transaction with a bridge loan from Morgan Stanley.
“The purchase price of $2 billion is expected to be funded by a combination of existing liquidity, free cash flow generation and new debt,” AGCO said in a statement on Thursday. The company has secured $2 billion in fully committed bridge financing from Morgan Stanley Senior Funding, it said, adding the acquisition is expected to close in the first half of 2024.
São Paulo-based AGCO is a supplier of farming machinery in one of the world’s largest agricultural exporters and is present on five continents. The acquisition will give it access to Trimble’s technology in “precision agriculture,” the firm said.
Trimble’s agriculture division, for its part, sells hardware, software solutions and cloud-based applications that span all aspects of the crop cycle, from land preparation to planting and seeding to harvest.
AGCO said it remains “committed to maintaining its solid investment grade credit rating.”
S&P Global Ratings said on Friday it affirmed the company’s BBB- local currency long-term credit rating and revised its outlook to positive from stable. AGCO is rated Baa2 with a stable outlook by Moody’s on the local scale.
Morgan Stanley acted as exclusive financial advisor to AGCO. Simpson Thacher & Bartlett LLP and Troutman Pepper Hamilton Sanders LLP acted as legal advisor and financing counsel, respectively.
Centerview Partners LLC was financial advisor to Trimble, and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor.