UPDATE 2-Amid sour ag economy, Deere to buy Monsanto equipment maker unit
(Releads, writes through with analyst, farmer comment)
By P.J. Huffstutter and Meredith Davis
CHICAGO Nov 3 (Reuters) - Monsanto Co's Climate Corp will sell its Precision Planting farm equipment business to Deere & Co for an undisclosed sum, a move that underscores how turmoil in the agriculture sector has made it ripe for consolidation.
For Climate, a unit of the world's largest seed company, the deal marks the latest push to shed businesses that are not focused on either software or services, Climate President Mike Stern said.
Deere, the world's largest farm equipment maker, hopes the deal will create a revenue stream in retrofitting older machinery to help offset slumping sales elsewhere.
With a glut of used farm equipment on the market and most farmers not interested in buying new machinery due to soft commodity prices, both companies are hoping the deal will tempt farmers to update equipment and buy into new farm-data services.
Grain prices are hovering around five-year lows and farm income is expected to tumble 21 percent this year, keeping a lid on spending by farmers and putting pressure on companies across the sector to consolidate and seek cost savings.
Tuesday's deal is Deere's second push into the precision-planting equipment arena this week. On Monday, it announced plans to acquire France-based Monosem. Monosem makes farm equipment known as "precision planters, that use a technologically advanced process in which farmers can specify seed planting depths by crop row.
Last month, Deere entered a joint venture with DN2K to create a software platform for agricultural advisers and consultants. Continuación...