US equipment maker Deere hits the highway with €4.6bn purchase

American heavy equipment maker Deere & Co is to expand into the road building sector by buying privately owned German rival Wirtgen Group for €4.6bn.

Wirtgen employs about 8,000 workers and operates manufacturing plants in Brazil, China, and India, supported by 55 distribution and service offices and more than 150 authorised dealers around the globe. It had sales of €2.6bn in 2016.

Max Guinn, president of Deere’s Worldwide Construction & Forestry Division, said in a press statement: "Spending on road construction and transportation projects has grown at a faster rate than the overall construction industry and tends to be less cyclical.

"There is recognition globally that infrastructure improvements must be a priority and roads and highways are among the most critical in need of repair and replacement."

The takeover will not lead to any big changes at Wirtgen. It will retain its management, its brands and its existing operations as they are now.

The US company’s board has approved the cash acquisition, but the deal will have to be approved by regulators around the world.

This Wirtgen deal follows Deere’s takeover of French agricultural machine maker Monosem in November 2015 for an undisclosed sum. As with Wirtgen, all that was changed by the deal was the owner of the company’s shares.

Deere expects it to finalise this latest purchase in the first quarter of next year.

Image: Deere excavators are a familiar part of site life in the US (Torben Hansen)

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