Thursday 29 September 2016

Merger has driven value of Kubota's machinery sales to €8.5bn per annum

Published 02/09/2015 | 02:30

Back in 2012 Kubota - the Japanese based tractor maker - effectively secured control of Kverneland when investors agreed to sell more than 78pc of shares in the Norwegian grassland and tillage implement maker.

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Kubota Corporation completed a full-ownership acquisition of Kverneland Group in May 2012, including its factories located in Norway, Denmark, Germany, France, The Netherlands, Italy, Russia and China.

The deal turned heads at the time - not least at Case New Holland who were reportedly locked in a two way tussle with Kubota for Kverneland.

The agreement turned Kubota into a long-line player in the global agricultural machinery market, with Kverneland's extensive portfolio of equipment for grass and tillage farmers complementing Kubota's own products.

Since the deal, Kubota has gained a stronger foothold in the European market with the launch of more powerful tractor models.

Industry experts estimate that Kverneland adds between €500m and €600m to the €8bn sales revenues generated by Kubota's farm and industrial machinery division.

This leg of the business produces the company's recognisable orange-liveried tractors, grounds care equipment, small diesel engines and light construction equipment, as well as paddy rice transplanters, harvesters and processing machinery for the Asian market.

But the takeover was very much symbiotic, perhaps best evidenced by the impressive range of launches this week.

Development

Strip-till technology, non-stop round baling, a self-propelled sprayer, an intelligent plough, section control for spreaders; it seems there is no end to the Norwegian firm's rate of development.

The backing by Kubota has seen manufacturing techniques altered to achieve higher efficiency and quality. In addition, R and D programmes have been accelerated and new manufacturing facilities have allowed projects to come to fruition.

On the ground, Irish farmers and dealers didn't see much, if any, change as a result of the deal.

This is a deliberate ploy to keep the optics steady, with Kubota's CEO at the time of the takeover being quoted as saying that "he wants Kverneland to continue as it is while exploring opportunities to exploit Kubota's distribution network, which is strong in Asia and North America."

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