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Industry 4.0 hits Agriculture – Driving growth in Tech M&A

Industry 4.0 in the DACH Region

Agriculture or Farming 4.0 is on the rise

Agriculture or Farming 4.0 is on the rise:  Technology innovations to make production more efficient and flexible, products more customised and customers more integrated into value chains are revolutionising the agricultural sector. ‘Connectivity’ is the buzz word: the industry is moving towards having every element in a farm - from tractors, to plant sensors and harvesting machines - all connected. Already big names in the tech world are fielding innovative products and solutions: ERP-giant SAP showed off its ‘Digital Farming’ idea at CeBIT this year. The prototype was real-time digital sensor software that showed how far plants have grown, how much fertilizer is needed and at what time the harvest should be done.

The tech-M&A market is reflecting the growing interest in Agriculture 4.0 as many acquirers begin to scale up (or establish) their offerings.  In December 2014, one of the world’s largest agricultural & farm equipment manufacturers, Deere & Company, acquired agricultural fleet management provider, Auteq Telematica. The acquisition strengthens John Deere's ability to provide customers with integrated solutions that enhance the performance and productivity of sugarcane plantations in Brazil. The company has also been busy creating its own agri-iot system (Program Farmsight) that enables the users to increase their agricultural yields and to optimise their work effort.

Prolific acquirer Trimble made two acquisitions in the past six months in this space. The most recent acquisition was for Finnish forestry & transportation logistics SaaS provider, Fifth Element. With this purchase, Trimble aims to provide solutions that drive integration of business data, improve efficiency and provide better visibility into forest operations to maximize productivity and profitability. Trimble’s previous acquisition in this space was for US-based agricultural equipment pricing provider IRON Solutions. IRON’s information together with Trimble’s Connected Farm solution will provide growers with a critical element in understanding their equipment lifecycle, enabling them to more efficiently manage their fleets.

In January 2015, Munich-based farming, construction & energy supplier, BayWa Ag acquired PC-Agrar GmbH. PC-Agrar provides agricultural ERP, SCM, GIS and farm operations management software, hardware and systems integration services for businesses in the agricultural sector. According to BayWa’s acquirer press release: ‘Given that the almost revolutionary challenges of ‘Industry 4.0’ also extend to the agricultural sector, this acquisition is [BayWa’s] way of arming itself for the digital future'

We expect further M&A activity in Agriculture 4.0 as more players enter this nascent market. Acquirers to watch in this space include:  Constellation Software, Hexagon AB, ORBCOMM, SAP AG, and Trimble Navigation.