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
"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
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
subsidiary named John Deere Ningbo Agricultural Machinery Co. Ltd.
to manage the business. The transaction is expected to close later
John Deere (Deere & Company - NYSE: DE) is the world's
leading provider of advanced products and services for agriculture
and forestry and a major provider of advanced products and services
for construction, lawn and turf care, landscaping and irrigation.
John Deere also provides financial services worldwide and manufactures
and markets engines used in heavy equipment. Since it was founded
in 1837, the company has extended its heritage of integrity, quality,
commitment and innovation around the globe.
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