Deere & Company to acquire Chinese tractor company

Deere & Company, the world's largest manufacturer of agricultural equipment, said today that it plans to expand small tractor manufacturing in China by acquiring the Ningbo Benye Tractor & Automobile Manufacture Co. Ltd. business, located in Ningbo in southern China.

Deere said it has signed a definitive agreement to purchase the Benye business and is seeking final review of the transaction by government approval authorities in China.

Through the acquisition, Deere will expand the product line offered to Chinese farmers and enhance its worldwide capacity to produce low horsepower tractors. Benye mainly builds tractors in the 20 to 50 horsepower range while Deere currently builds tractors in the 60 to 120 horsepower range at its current China joint venture tractor factory, located in Tianjin.

"Our objective is to distinctly serve those who work the land," said Robert W. Lane, chairman and chief executive officer of Deere & Company. "The acquisition of Benye will allow us to better serve customers in China with a more complete product line, as well as to provide tractors from China to other locations in the world. This action is an example that John Deere continues to seek opportunities for global growth."

Deere has provided products and services to the China agricultural market since 1976 and has manufactured equipment in China since 1997, when it entered a joint venture to build combines at a factory at Jiamusi. The Jiamusi operation is now wholly–owned and the company also manufactures tractors at a joint venture, John Deere Tiantuo Co., Ltd.

Benye, which was started in 1955, is the largest tractor manufacturer in southern China. It has a new manufacturing facility that covers 200,000 square meters, which includes research and development, manufacturing, and marketing. While 95 percent of the company's current revenues come from sales within China, the company has exported tractors to 70 countries worldwide.

"We do have an ambition to grow both our domestic and export market in China," said David Everitt, president of Deere's Agricultural Division in North America, Australia, Asia, and for Global Tractor and Implement Sourcing. "Our decision to acquire Benye provides us an excellent opportunity to align with a high quality manufacturer of tractors in a horsepower range important to our customers."

Additionally, Everitt said, there is a growing demand for smaller tractors in China because of the increasing mechanization by rice farmers. Deere anticipates that farmers with less powerful equipment will be upgrading to machines in the 20 to 50 horsepower range built by Benye. Everitt said Deere expects to leverage Benye's product range and manufacturing capacity for sales into other Asian, African, and CIS markets.

Financial details of the expected acquisition were not made public. However, Deere did report that it will create a wholly–owned subsidiary named John Deere Ningbo Agricultural Machinery Co. Ltd. to manage the business. The transaction is expected to close later this year.