With CNH Industrial’s US$2.1 billion bid to take over Raven Industries it places the farming giant in a position to take the lead in autonomous farm vehicle manufacture
Raven Industries was seen as the leader in autonomous agriculture technology when it recently released its autonomous farm platform OMNiPOWER to farmers worldwide. This followed the company selling its second OMNiPOWER platform to Haggerty AgRobotics in Canada.
The OMNiPOWER platform has captured farmers attention, and for good reason. It is the most likely alternative ever offered to replace tractor power on farms, and it doesn’t need an onboard operator.
The big four tractor companies were well aware of this potential threat to their livelihood and industry watchers have been waiting for some time to see which badge would be tempted to steal a march on its competitors and grab the rights to this unique stepping stone in farm machinery history.
The OMNiPOWER platform started out as the DOT Power Platform Invented by SeedMaster President Norbet Beaujot in 2017. And while Norbet is a man that many learn to listen to when he speaks, his company was no threat to the big four tractor giants.
Norbet Beaujot’s initial focus was to build a power platform capable of manoeuvring his SeedMaster planters into a designated pattern across vast paddock expanses, all autonomous, without an onboard driver and certainly no tractor required.
As is the case with Norbet’s other product lines, he was simply too successful. The end result was DOT, a U-shaped, diesel-powered, hydraulically driven platform with the potential to mount any farm implement within its four hydraulic lift arms.
The prototype platform gained its power from a Cummins QSB4.5 Tier 4i engine rated at 120kW (163hp). But of course this could be extended to 500kW (671hp) for future builds. The transport width was 3.6m (11.10ft) on the original unit.
DOT could be programmed to enter the paddock and take on the work autonomously or by remote control. When in work mode, DOT used RTK to operate within pre-set boundaries or farmer-advised passes.
Norbet’s greatest stroke of genius was that the DOT Power Platform was U-shaped, a design point that allows for such easy implement adaptation, just slide in and connect.
When DOT was demonstrated for the first time in 2017, the big four stood up and took notice. It made their rhetoric about autonomous tractors start to sound hollow, as it looked likely DOT had made them obsolete even before they got into operation.
At the time of DOT’s appearance Case IH had revealed its cabless autonomous concept. A Magnum tractor with its roof cut off and reimagined styling. Not progressed since.
While New Holland stomped up the NH Drive driverless tractor, with a cab that looked just like any other operator driven model from the T8 Series. Not much effort went into this one.
Meanwhile John Deere was still toying with its autonomous tractor concept and it wasn’t until 2019 when the company tempted us with its electric cable-powered GridCON model. What a mess, electric cables everywhere.
And somehow, following a promising tilt winning a gold medal in 2012, and extensive paddock tests, Fendt’s driverless tractor concept had all but disappeared.
Norbet Beaujot’s DOT platform was in winning position. The platform was up and running, was driverless and could accomplish limitless tasks for a farmer, as its adaptation could eventually incorporate all independent implement manufacturers.
Norbet refused the advances of the big four, but did accept that a more accurate GPS frequency such as that offered by Raven Industries could fast forward DOT’s appeal to the masses.
The two companies, Dot Technology Corp and Raven Industries began working together in May 2018 and announced that the Dot Platform would be fitted with Raven technology, including steering, guidance and propulsion.
At the time Norbet Beaujot said, “Raven has been a critical partner in helping to get DOT to where we are today. Our combined technologies will undoubtedly help accelerate speed to market and adoption of machine autonomation.”
DOT was ready to take on board all implement manufacturers and show them how the U-Shaped DOT platform could integrating their equipment and fast forward their sales.
While the big four were watching from behind closed doors, Raven Industries swooped. The company had the inside running on just how well DOT was travelling, it entered into an agreement in October 2019 to acquire majority ownership of DOT.
Industry observers pondered the mindset of founder Norbert Beaujot and were relieved when he released a statement about the purchase saying, “I am very pleased with this investment, it greatly accelerates DOT’s speed to market.
By March 2020, Raven Industries with the help of an enthusiastic banker had it all. The company entered into agreements to acquire the remaining equity of the DOT Technology Corp.
“As well as the quality of the system, for farmers who are seeking a path to autonomy. I am looking forward to continued collaboration between the DOT and Raven teams to fulfill my vision of DOT helping farmers address labour constraints and capital costs while increasing operational efficiency at the farm level.” DOT founder Norbert Beaujot concluded at the time.
And while Norbert Beaujot no longer had a stake in DOT, after five years of development and the initial commercial release of DOT, he agreed to continue to develop implements for DOT and aid Raven whenever they asked.
Within two short years, Raven Industries was sitting on ownership of the most advanced autonomous power unit for farming, one that had the ability to pair with a wide range of implements and offer labour saving solutions to farmers like never before.
Raven Industries was value adding all the way in its journey, it fused DOT and its recently acquired Smart Ag autonomous grain cart into its planned technology path. Raven was getting bigger by widening its product arsenal, and quicker than many had expected
These additions further ensured Raven’s core technology platforms in guidance, steering, and machine control. Enabling the company to deliver further autonomous solutions and greatly accelerate the DOT platform Technology.
Raven wanted the industry to take notice, and relaunched to all world markets as OMNi in June 2021.
CNH makes an offer too good to refuse
The tension was too much to bear, the OMNi brand was gaining pace quickly, their second platform was sold and a multitude of orders were expected to follow as the platform was now offered for sale into all world markets.
CNH Industrial saw no reason the wait any longer, the tractor giant grabbed the unassailable autonomous platform lead with a US$2.1 billion bid.
This is how it will play out.
CNH Industrial N.V. will acquire 100% of the capital stock of Raven Industries Inc. for US$2.1 billion. This offer is equivalent to US$58 per share, representing a 33.6% premium to the Raven Industries 4-week volume-weighted average stock price, and US$2.1 billion Enterprise Value.
But apparently the deal is no big impost for CNH as the transaction will be funded with available cash on hand from CNH Industrial.
Closing is expected to occur in the fourth quarter of 2021, subject to the satisfaction of customary closing conditions, including approval of Raven shareholders and receipt of regulatory approvals.
All the good cheers you would expect followed
The acquisition builds upon a long partnership between the two companies and CNH Industrial said the purchase will further strengthen its position in the global agriculture equipment market.
“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,” said Scott Wine, Chief Executive Officer, CNH Industrial.
“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.” Scott Wine of CNH Industrial added.
Meanwhile, Dan Rykhus, President & Chief Executive Officer for Raven Industries had this to say, “Our Board and Management are excited about this partnership and what it means for our future.
“For 65 years, our company has been committed to solving great challenges. Part of that commitment includes delivering ground breaking innovation by developing and investing in our core capabilities and technology.
“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.”
Headquartered in Sioux Falls, South Dakota, Raven Industries is organised into three business divisions: Applied Technology (precision agriculture), Engineered Films (high-performance specialty films) and Aerostar (aerospace) with consolidated net sales of US$348.4 million for the twelve months ended January 31, 2021.
The company is a global technology partner for key strategic OEMs, agriculture retailers and dealers. The transaction is expected to generate approximately US$400 million of run-rate revenue synergies by calendar year 2025, resulting in US$150 million of incremental EBITDA from synergies.
The Engineered Films and Aerostar segments are industry leaders in the high performance specialty films and stratospheric platform industries, respectively, and CNH Industrial believes they represent attractive independent businesses with excellent near and long-term potential.
Accordingly, CNH Industrial plans to undertake a strategic review of each business to best position them for future success and maximize shareholder value.
The final phase will be the most interesting
As CNH Industrial walk away with what many in the industry see as the greatest prize currently available in agriculture, there are two paths to glory.
Does CNH throw down the further billions of dollars required to make OMNiPOWER the standard power platform for farming, and slowly phase out tractors. And in doing so become the leading power platform manufacturer at the outset.
Or will CNH hold OMNiPOWER in a more specialised sales category and sell fewer units in favour of maintaining its current abundant tractor lines.
Afterall, for a tractor maker there is no greater threat than OMNiPOWER or a copycat that may follow quickly. Picking up a sale for a prototype released just four years ago, and to date has only managed two actual machine sales, raking in a US$2.1 billion take-over offer is not a bad return.
Venture capitalists will recognise there are at least three other major orders to fill for the same product range. And will pursue any budding inventors that look even likely to have an alternative to OMNi.
But whichever way the parody plays out, CNH is currently in the most dominant position to exploit.