Multinational firm CNH Industrial (CNHI) has signed an agreement to acquire South Dakota-based precision agriculture technology provider Raven Industries (RAVN) for $2.1 billion. CNH Industrial designs, produces, and sells agricultural equipment and construction equipment, trucks, commercial vehicles, buses, and special vehicles, as well as powertrains for industrial and marine applications.
The company plans to fund the acquisition with available cash on hand. The enterprise value of RAVN represents a premium of 33.6% to the stock’s 4-week volume-weighted average price. The acquisition is likely to close in the fourth quarter of 2021.
CNH Industrial’s financial advisors for the transaction were Goldman Sachs Group (GS) and Barclays. The company’s shares closed 3.4% lower on June 18. (See CNH Industrial stock charts on TipRanks)
Scott Wine, CEO, 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. 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.”
Evercore ISI analyst David Raso recently maintained a Buy rating on the stock, while increasing the price target from $18 to $25 (54.3% upside potential). In a research note to investors, Raso said the machinery sector and commodity prices are “highly positively correlated.”
Overall, the stock has a Moderate Buy rating based on 4 Buys and 2 Holds. The average CNH Industrial analyst price target of $20.63 implies 27.5% upside potential to current levels. CNH Industrial’s shares have gained 128% over the past year.
According to TipRanks’ Smart Score rating system, CNHI scores a 9 out of 10, suggesting that the stock is likely to outperform market averages.
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