4 Min Read
(Reuters) - Deere & Co (DE.N) said its proposal to buy Precision Planting, an agricultural equipment and technology company, will increase consumer choice and directly benefit growers, in a response filed on Wednesday to the U.S. Department of Justice's lawsuit to block the acquisition.
Deere announced its planned acquisition of Precision Planting in November 2015, for about $190 million. Precision Planting's parent is The Climate Corporation, which is a unit of Monsanto Co (MON.N).
In August, the Justice Department said the proposed deal would mean higher prices for high-speed precision planting equipment, which allows farmers to plant row crops, such as corn, up to twice as fast as with conventional machinery.
In its response, Deere challenged the Justice Department's definition of "high-speed precision planting system," saying it was vague and ambiguous. Deere also denied "that there is any meaningful economic market consisting of 'high-speed precision planting systems.'"
The Justice Department declined to comment on Thursday.
Deere said the Justice Department initially cleared its proposed acquisition in October 2015 in compliance with the Federal Trade Commission’s Hart-Scott-Rodino Act. Clearance is separate from actual approval of a deal.
Following a protest by an unnamed Deere competitor, the Justice Department opened a new investigation and later filed a lawsuit in August 2016 to block the transaction, Deere spokesman Ken Golden said, referring to legal documents the company filed on Wednesday.
"It is our position that this case is designed to protect a competitor, not competition," Golden said.
Both Deere and the Justice Department declined to name the competitor.
CNH Industrial and AGCO Corp (AGCO.N) are Deere competitors that have agreements to factory install Precision Planting equipment on their new planters. Precision Planting equipment and technology can also be retrofit on older planters manufactured by Deere, Kinze Manufacturing, CNH Industrial and AGCO.
Deere said the company's commitments to CNH Industrial and AGCO, and its license grants, technology transfers are all "pro competitive."
Additionally, Deere entered into an agreement with Ag Leader, an agricultural technology company, to manufacture and sell Precision Planting products if the acquisition is completed, as a possible remedy to the Justice Department's competition concerns.
Ag Leader will remain an independent competitor in the precision agriculture industry, a statement on the company's website said.
Deere's proposed deal is part of a wave of consolidation among agriculture companies as they search for ways to cut costs and improve profits in the face of a shrinking farm economy. Seed and agrochemical producers Monsanto and Germany's Bayer AG (BAYGn.DE) have agreed to merge, while ChemChina wants to buy Syngenta AG (SYNN.S) in a $43 billion deal.
Reporting by Meredith Davis in Chicago; Additional reporting by Karl Plume; Editing by Leslie Adler