U.S. Government Sues John Deere to Block Purchase of Monsanto Subsidiary
MOLINE, IL – As John Deere pursues its planned purchase of the Monsanto-owned farm equipment business Precision Planting, the U.S. Justice Department (U.S. DoJ) has filed suit against the company in U.S. courts to prevent the sale.
The sale has been planned since November of last year, with Monsanto agreeing to sell its business to John Deere. The U.S. DoJ stated that this sale could make it more expensive for farmers to access and utilize precision planting technology.
"By offering farmers high-speed precision planting retrofit kits at a fraction of the cost of a new planter, Precision Planting posed a formidable challenge to Deere and its profitable sales of new planters," the Justice Department said in its complaint and request for courts to block the sale.
Precision Planting makes components for precision planters, including technology to retrofit older planters and manufacturers. The DoJ, according to Reuters, is reportedly concerned about the combination of John Deere selling both the machines themselves, as well as the technology to create them.
"Precision Planting has been a key innovator in high-speed precision planting and Deere’s only significant competitor in developing and selling these technologies," said Renata Hesse, the Acting Assistant Attorney General of the Justice Department’s Antitrust Division in a press release.
The DoJ estimated that together, John Deere and Precision Planting make up 86 percent of the market, at a minimum, with the estimated transaction price at around $190 million.
Monsanto’s Precision Planting business is being sold but its Climate Corporation unit. The Monsanto subsidiary stated that it believes the sale is good for the farming industry, with both companies looking to give farmers incentive through the sale to upgrade their equipment and services.
"This transaction will create value by delivering broader access to precision equipment advancements that help farmers increase yield and productivity," Climate Corporation said.
John Deere said in a press release that it believes the DoJ’s concerns about the competitive impacts of the transaction are misguided, and intends to fight the lawsuit. John Deere stated that it will remain its focus on helping American farmers up productivity and efficiency to become globally competitive.
This transaction, if approved by the courts, would mark the second precision planting purchase for John Deere within the past year. In February, John Deere completed its acquisition of Monosem, another precision planting company.
Retuers noted that after the suit was filed yesterday, John Deere's share price dropped 1.4 percent to close at $84.55 on Wednesday, with Monsanto's share falling 0.9 percent to close at $106.50.
Will U.S. courts side with the Department of Justice and block the sale? Or will John Deere continue its proposed purchase of the farming company? AndNowUKnow will keep you up-to-the-minute as the deal unfolds.
