AGCO Corporation’s (AGCO) unit Grain Systems, Inc. has purchased Marshall, Mich.-based Johnson System Inc., a leader in structural steel manufacturing with a focus on the agricultural industry.
Established in 1983, Johnson System manufactures towers, catwalks, temporary storage systems, aeration systems, super structures, decks, stair systems, bean ladders and numerous other agricultural products. Johnson System’s manufacturing operation in Marshall and its 70 employees will come under the wing of Grain Systems.
Grain Systems is the world's largest manufacturer of steel farm grain bins and also provides grain drying, grain conditioning, and material handling. Grain Systems is a unit of GSI Group, which was acquired by AGCO for $940 million in Nov 2011. GSI Group is a leading manufacturer of grain storage and protein production systems. The acquisition propelled farm equipment maker AGCO into the grain storage and livestock industries - in line with its vision of expanding its product offerings and entering new markets. Grain storage and protein production systems accounted for approximately 7% of AGCO’s net sales in 2012.
The Johnson System acquisition will provide AGCO with new growth opportunities that will offer its dealers system solutions to enhance productivity, efficiency and profitability of their customers’ operations. AGCO will also benefit from Johnson System’s over 30 years of experience in the grain handling business and full line of reputed products and custom design options that meet the unique and specific needs of any project.
AGCO remains committed to its plans of expanding its business in domestic and international markets. It expects elevated agricultural commodity prices in 2013 to support healthy farm income and sustain equipment demand. However, growth in South America and North America is expected to be offset by modest declines in Western Europe. Global industry demand is expected to be relatively flat in 2013 compared with 2012.
AGCO expects gross margin to improve in 2013 compared with 2012, but it may be somewhat affected by increased market development expenses and higher engineering expenditures to meet Tier 4 final emission requirements. AGCO currently retains a short-term Zacks Rank #3 (Hold).
Duluth, Ga.-based AGCO is a global leader focused on the design, manufacture and distribution of agricultural machinery. AGCO supports more productive farming through a full line of tractors, combines, hay tools, sprayers, forage equipment, tillage, implements, grain storage and protein production systems, as well as related replacement parts.
Other companies in the machinery and farming industry are Alamo Group, Inc. (ALG), Kubota Corporation (KUBTY) and Lindsay Corporation (LNN). While Alamo Group and Kubota Corporation sport a Zacks Rank #1 (Strong Buy), Lindsay holds a Zacks Rank #2 (Buy).