AGCO announced this week that it has reached agreement in principle to acquire the forage division of the Lely Group. Lely’s forage division is a leading manufacturer of balers and loader wagons in Europe.

The transaction is subject to regulatory approval and is expected to close in the fourth quarter of 2017. Furthermore, the process for employee consultation will now begin. “The integration of Lely’s industry-leading competence in hay and forage technology will further strengthen AGCO’s full-line product offering,” said Martin Richenhagen, AGCO’s chair, president and chief executive officer.

The Lely Group, which is best-known for its automated milking systems, is to sell the forage side of its business to AGCO, which manufactures machines and equipment for the agricultural sector. Lely acquired this business from Welger back in 2008, just under 10 years ago.

The sale is said to benefit both parties, as it will allow Lely to fully concentrate on the dairy side of the business, while allowing AGCO to further broaden its range of forage harvesting machines.

The Lely Group, founded in 1948, is active in more than 60 countries and currently employs approximately 2,000 people.

Integration of the Lely brand

AGCO, which also has the Fella brand in its grass line, will have to integrate the Lely brand. It is widely anticipated that the Lely equipment will be aligned with the Fendt brand. This is again speculation, with nothing confirmed from AGCO directly. It will also be interesting to see what happens to existing Lely dealers who do not have an AGCO franchise.

The sale to AGCO will have an effect on jobs at Lely, including the 95 employees in the Netherlands involved in production of the forage machines. This production is expected to cease from 31 March 2018. The employees will temporarily be seconded to AGCO Corporation before this date, but from 1 April 2018, their jobs will be at risk, with a solution sought for their future inside or outside the company. A total of 100 people working in Lely’s head office in Maassluis, Holland, will lose their jobs, as will 100 people working in the company outside the Netherlands.

Concurrently, 300 people will move from Lely to AGCO, bringing Lely’s total number of employees down to approximately 1,300. Lely has a location in Nurney, Co Kildare, but, speaking to the Irish Farmers Journal, Lely vice-president Andre Van Troost said the company is not yet in a position to give exact employee details per location. However, he added that he expects a number of forage people who work in country organisations like Ireland to join AGCO.

Van Troost said that, as a family-owned business, making the decision to sell the forage business and put jobs at risk was a tough one. “This is a tough day for us and it was a tough decision to make,” he said. “We are a family-owned company and we care about all of our employees, so this was not an easy decision for us to make.”

CEO Alexander van der Lely explained the strategy behind the decision: “Lely intends to focus entirely on its role as innovator in the field of robotisation and sensor and data systems for use on dairy farms. Over the last 15 years, these product groups have grown into a successful activity for Lely, with a great deal of potential for the future. Besides the innovative milking robot, other products have also been developed that are primarily based on automation with the aid of robots.”

The production of these dairy machines will stay in Maassluis (The Netherlands), Pella (United States) and Leer (Germany).

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