CHICAGO (Reuters) - Monsanto Co’s (MON.N) Climate Corp subsidiary on Tuesday announced a definitive agreement to sell its Precision Planting farm equipment business to Deere & Co (DE.N) for an undisclosed sum.
The deal also allows nearly real-time data connections between certain John Deere farm equipment and Climate’s farming software programs, Climate FieldView. Climate will keep its digital farming tools.
The deal is subject to regulatory approval, the companies said in a statement.
John May, Deere’s president of agricultural solutions and chief information officer, said in a statement that the agreement would allow the company to extend the range of retrofit options available from Precision Planting to many more products and into new geographies.
But the news was met with skepticism and some unease by some farmers who have long used Precision Planting’s computer hardware and software tools, and farm equipment hardware, to help them plant seeds in ways that will be most productive for boosting yields.
”Precision Planting was a very innovative company,“ said Steve Pitstick, a corn and soybean farmer who farms about 2,600 acres in Illinois. ”When they were privately held, they were bringing us two or three new things a year that were great.
“When Monsanto bought them, it was one or two new things a year, and nothing that wowed. Now, I don’t know what to expect.”
For Deere, the news marks the second push into the precision-planting equipment arena this week. On Monday, it announced plans to acquire Monosem, a European family-owned farm equipment manufacturer that specializes in “precision planters” designed to increase crop production.
But Tuesday’s announcement comes at a challenging time for Monsanto, which is restructuring its operations to cut costs in a slumping commodity market. It is also contending with a years-low share price, a failed $46 billion bid to buy Syngenta AG SYNN.VX and an agricultural economy expected to remain sluggish in the coming years.
As part of its corporate shift, Monsanto had been seeking to reposition itself as a business built on data science and services, as well as its traditional chemicals, seeds and genetic traits operations.
But Tuesday’s news could signal that the company is trying to hone its high-tech strategy, industry analysts said.
Monsanto made its first major move into high-tech farming when it acquired Precision Planting for $250 million in 2012.
The business unit was later rolled under its Climate Corp umbrella.
Additional reporting by Meredith Davis in Chicago