Zacks Investment Research | Sep 12, 2017 09:41PM ET
Deere & Company (NYSE:DE) has completed the previously announced acquisition of CA-based, Blue River Technology, for $305 million. This buyout will provide a competitive edge to Deere and bolster its position as a leader in precision agriculture. Blue River Technology is considered a pioneer in bringing machine learning to agricultural spraying equipment. In fact, the company claims that its precision farming technology can save farmers up to 90% of chemical costs used compared with more traditional approaches.
Blue River Aids in Cutting Chemical Costs, Increases Farm Income
Over-reliance on broadcast-spray chemicals as per traditional methods has led to herbicide tolerance in weeds which is a growing concern. Fighting these weeds impacts the crops and consequently farmers’ profitability. This is where Blue River’s technology comes to use. Computer vision, robotics, and artificial intelligence are being used to help smart machines detect, identify, and make management decisions about every single plant in the field. For instance, Blue River's award winning “see and spray“ robots affix to tractors and can precisely identify and spray chemicals only to the plants in need.
Blue River’s technology consequently helps cut down the chemical usage, the costly inputs used in farming, enabling farmers to spend more on farming equipment. This in turn will benefit Deere.
Adding Technology to Agriculture — Need of the Hour
The acquisition is in line with Deere's acquisition of NavCom Technology in 1999. NavCom systems and products use GPS satellites, communications satellites and wireless communications media for the acquisition, processing and delivery of precise positioning data. With the buyout, Deere attained a leadership position in the use of GPS technology for agriculture and accelerated machine connectivity as well as optimization.
Deere's sales in the past few years had been dented by lower farm income that impacted farmers’ ability to spend on equipment. To combat the weak environment, the company had resorted to cutting back on production and layoffs. It also benefited from the adept execution of operating plans and disciplined cost management as well as the impact of a broad product portfolio.
The scenario has improved this year. Deere anticipates net sales to increase about 11% year over year and projects net income to be roughly $2.075 billion in fiscal 2017.
Notably, the stock has outperformed the Zacks Investment Research
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