Item 1.01
Material Definitive Agreement
On May 31, 2017, Deere & Company (Deere) entered into a Share and Asset Sale and Purchase Agreement (Agreement) with Wirtgen Group Holding GmbH (Wirtgen) pursuant to which Deere has agreed to acquire substantially all of Wirtgens business operations (the Acquisition). Wirtgen is a leading worldwide manufacturer in the road construction industry. The operating group of companies includes product brands WIRTGEN, VÖGELE, HAMM, KLEEMANN, BENNINGHOVEN, and CIBER; as well as sales and service companies worldwide. The purchase price for the Acquisition, which is payable in cash, is EUR 4,357,000,000 (or approximately US 4,900,000,000 based on currency exchange rates
as of May 25, 2017), a portion of which will be held in escrow to secure certain indemnity obligations of Wirtgen in connection with the Acquisition. In addition to the purchase price, at the closing of the Acquisition Deere will assume substantially all liabilities of the Wirtgen business and pay Wirtgen an amount equal to five percent per annum multiplied by the purchase price for the period that elapses from the signing date until the closing date, which amount represents compensation for the earnings of the Wirtgen business during such period (the Ticking Fee). The estimated total transaction value is approximately EUR 4,600,000,000 (
or approximately US 5,200,000,000
based on currency exchange rates as of May 25, 2017), representing the aggregate purchase price for the Acquisition, plus the assumed net debt of the Wirtgen business, and the estimated Ticking Fee.
The closing of the Acquisition is subject to customary closing conditions, including expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and receipt of other required anti-trust approvals in foreign jurisdictions, including in particular, the European Union, China, Brazil, India and Russia. The Agreement contains customary representations, warranties, and covenants for a transaction of this type, including an undertaking providing for each of the parties to use best efforts to cause the transactions to be consummated. Pursuant to the Agreement, Wirtgen has agreed to indemnify Deere for losses resulting from a breach of certain representations and warranties, subject to certain limitations. During the period between the execution of the Agreement and closing of the Acquisition, Wirtgen is required to operate in the ordinary course. The Agreement also contains certain rights to rescind the Agreement prior to closing, including by Deere in the event of a material adverse change (as defined in the Agreement) during the period between the execution of the Agreement and the closing of the Acquisition or by either party in the event the closing of the Acquisition has not occurred by February 28, 2018.
The parties expect the Acquisition to close in the first quarter of the 2018 fiscal year. Deere currently expects to fund the Acquisition and the related fees and expenses from a combination of cash and new debt financing. There is no financing condition to the Acquisition.
The foregoing summary of the Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Agreement, a copy of which is filed herewith as Exhibit 2.1 and is incorporated into this report by reference. The Agreement contains representations and warranties by each of the parties to the Agreement, which were made only for purposes of that Agreement and as of specified dates. The representations, warranties and covenants in the Agreement were made solely for the benefit of the parties to the Agreement, are subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Agreement instead of establishing these matters as facts, and are subject to standards of materiality applicable to the contracting parties that may differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Deere, Wirtgen or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Agreement, which subsequent information may or may not be fully reflected in Deeres public disclosures.
Forward Looking Statements
This document and the exhibits filed herewith contain forward-looking information related to Deere, Wirtgen, and the Acquisition that is based on current expectations and involves substantial risks and uncertainties that could cause actual results, performance, events, or transactions to differ materially from those expressed or implied by such statements.
Forward-looking statements in this document and exhibits include, among other things, statements about Deere and Wirtgens plans, objectives, expectations and intentions; the financial condition, results of operations and business of Wirtgen; the anticipated timing of closing of the Acquisition; the potential benefits of the proposed Acquisition; and the anticipated operating synergies. Risks and uncertainties include, among other things, risks related to the satisfaction of the conditions to closing the acquisition (including the failure to obtain necessary regulatory approvals) in the anticipated timeframe or at all, risks that the expected benefits from the proposed acquisition will not be realized or will not be realized within the expected time period; the risk that the businesses will not be integrated successfully; significant transaction costs; unknown or understated liabilities; other business risks, including the effects of industry, market, general economic, political or regulatory conditions; future currency exchange and interest rates; changes in tax and other laws, regulations, rates and policies; and future business combinations or disposals. In addition, actual results, performance, events and transactions, are subject to other risks and uncertainties that relate more broadly to Deeres overall business, including those more fully described in Deeres filings with the U.S. Securities and Exchange Commission (SEC) (including, but not limited to, the factors discussed in Item 1A. Risk Factors of Deeres most recent annual report on Form 10-K and quarterly reports on Form 10-Q). In light of these risks, uncertainties, and other factors, you are cautioned not to place undue reliance on the forward-looking information. Deere, except as required by law, undertakes no obligation to update or revise the forward-looking statements, whether as a result of new developments or otherwise.