CNH Industrial entered into an agreement to acquire 100% of the capital stock of Raven Industries, a U.S.-based provider of agriculture technology, for $58 per share, representing a 33.6% premium to Raven Industries’ four-week volume-weighted average stock price and $2.1 billion enterprise value.

The transaction will be funded with available cash on hand of CNH Industrial. Closing is expected to occur in Q4/21, subject to the satisfaction of customary closing conditions, including approval of Raven shareholders and receipt of regulatory approvals.

“Precision agriculture and autonomy are critical components of our strategy to help our agricultural customers reach the next level of productivity and to unlock the true potential of their operations,” Scott Wine, CEO of CNH Industrial, said. “Raven has been a pioneer in precision agriculture for decades, and their deep product experience, customer driven software expertise and engineering acumen offer a significant boost to our capabilities. This acquisition emphasizes our commitment to enhance our precision farming portfolio and aligns with our digital transformation strategy. The combination of Raven’s technologies and CNH Industrial’s strong current and new product portfolio will provide our customers with novel, connected technologies, allowing them to be more productive and efficient.”

Headquartered in Sioux Falls, SD, Raven Industries is organized into three business divisions: applied technology (precision agriculture), engineered films (high-performance specialty films) and Aerostar (aerospace), with consolidated net sales of $348.4 million for the 12 months ended Jan. 31, 2021. CNH Industrial plans to undertake a strategic review of each business to best position them for future success and to maximize shareholder value.

“Our board and management are excited about this partnership and what it means for our future,” Dan Rykhus, president and CEO of Raven Industries, said. “For 65 years, our company has been committed to solving great challenges. Part of that commitment includes delivering groundbreaking innovation by developing and investing in our core capabilities and technology. By coming together with CNH Industrial, we believe we will further accelerate that path as well as bring tremendous opportunities and value to our customers — once again fulfilling our purpose to solve great challenges. Our relationship with CNH Industrial has expanded over decades, and we have a deep respect for one another and a shared commitment to transform agriculture practices across the world. We look forward to CNH Industrial leveraging the Raven talent and culture, as well as the Sioux Falls community, as part of their vision and future success.”

“Raven Industries’ capabilities, innovation culture, entrepreneurial spirit and engineering talent are impressive and will continue to thrive as part of the CNH Industrial family. Sioux Falls is and will continue to be a true center of excellence,” Wine said. “We are incredibly excited to collaborate in bringing our customers more integrated precision and autonomous solutions, not only to improve productivity and profitability, but also promote more sustainable solutions and environmental stewardship. Together, our teams will create a stronger business for our employees, dealer network and customers, enabling us to shape the future of agriculture, augment our world-leading sustainability credentials and maximize our growth opportunities.”

Raven is a global technology partner for OEMs, agriculture retailers and dealers. This transaction is expected to generate approximately $400 million of run-rate revenue synergies by calendar year 2025, resulting in $150 million of incremental EBITDA.

CNH Industrial does not expect the proposed acquisition will have any impact on its guidance for 2021. The acquisition is expected to be funded with group consolidated cash and will not affect third-party debt of industrial activities. Cash consideration for the transaction is not included in the free cash flow definition and, consequently, it will not affect free cash flow guidance for the FY 2021E.

Barclays and Goldman Sachs acted as financial advisors to CNH Industrial and Sullivan & Cromwell acted as its legal advisor. J.P. Morgan Securities acted as financial advisor to Raven and Davis Polk & Wardwell acted as its legal advisor.