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CNH Industrial (CNHI) to Acquire Raven in Deal Worth $2.1B

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CNH Industrial (CNHI - Free Report) recently announced the decision to acquire 100% capital stock of Raven Industries, Inc. (RAVN - Free Report) — a U.S.-based agriculture technology company.

In a $2.1-billion deal, CNH Industrial will pay $58 per share to Raven, accounting for a 33.6% premium to Raven's four-week volume-weighted average stock price.

The Raven buyout, which is one of the largest acquisition deals for CNH Industrial since it was formed in 2013, requires approval from Raven shareholders. The transaction, expected to conclude in the fourth quarter of 2021, will be funded by CNH industrial through available cash on hand. Moreover, CNH Industrial does not expect the proposed acquisition to impact its financial guidance for this year.

Headquartered in Sioux Falls, South Dakota, Raven Industries is a leader in precision agriculture, high performance specialty films, and aerospace and defense solutions. The company is divided into three business segments — Applied Technology (precision agriculture), Engineered Films (high performance specialty films) and Aerostar (aerospace). Raven is committed to providing state-of-the-art, high-value products and solutions worldwide through a network of key strategic OEMs, agriculture retailers and dealers.

Based in the U.K., CNH Industrial, which is controlled by Italy's Agnelli family through its holding company Exor, is a global leader in the capital goods sector and manufacturer of agricultural equipment. Its products range from tractors to trucks and buses, along with powertrain solutions for off- and on-road, and marine vehicles.

Advantages of the Takeover

Precision agriculture and autonomy are crucial elements of CNH Industrial’s strategy in helping its agricultural customers realize the true capabilities of their operations. The buyout will give CNH Industrial access to Raven’s cutting-edge technology in the agriculture industry, thus bolstering the position of the former in the global agriculture equipment business.

Leveraging upon Raven’s decades of expertise, the deal will provide CNH Industrial robust potential in the fields of autonomous and precision agriculture technology. In fact, Raven’s Engineered Films and Aerostar segments hold a dominant position in the high performance specialty films and stratospheric platform industries, respectively. With this acquisition, CNH industrial anticipates to garner significant growth opportunities in these genres as well.

The proposed takeover is in sync with CNH Industrial’s strategy of investing in advanced agricultural technologies in a bid to fortify its precision farming portfolio. Moreover, the deal is projected to generate roughly $400 million of run-rate revenue synergies by 2025, resulting in $150 million of incremental EBITDA.

The takeover is considered revolutionary as it showcases CNH Industrial’s consistent dedication to invest in productivity-boosting sustainable technologies, which enhance the well-being of farmers.

The Italian-American vehicle maker is highly thrilled about this buyout, as the combination of Raven’s technologies with its strong current and new product portfolio will provide customers greater access to productivity-enhancing automation technologies and groundbreaking agricultural innovations. Together, both companies will create a stronger business for CNH Industrial’s employees, dealer network, and customers, enabling them to shape the future of agriculture industry.

CNH Industrial considers strategic acquisitions crucial in its quest to grow profitably. The latest deal will help unlock new acquisition opportunities for CNH Industrial, providing it the ability to further expand its business.

Meanwhile, CNH Industrial plans to complete the spin-off of its low margin-generating Iveco truck and bus units early next year, along with the company’s FPT engine division, in a bid to enhance asset values and streamline businesses. The split business will be separately listed as an entity called On-Highway.

CNH industrial, peers of which include Navistar International and Daimler AG (DDAIF - Free Report) , currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Notably, shares of the company have surged 130.4% in the past year, while the industry has rallied 47.2%.

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