CNH Unit Says Private-Equity Interest in Dealers Is New
Some dealers for Case IH, CNH Global NV (CNH)’s farm-equipment unit, have attracted interest from private- equity firms seeking to profit from rising tractor and combine demand, a Case executive said.
“We have private equity that is interested for the first time in agribusiness distribution,” Jim Walker, vice president of Case IH North America, said yesterday in an interview at the Farm Progress Show in Decatur, Illinois. “Five years ago you would’ve never heard of that. It’s a new phenomenon.”
The dealers, who aren’t controlled by CNH or parent Fiat Industrial SpA, are vital to the success of farm-machinery manufacturers, he said. It’s not clear how helpful or successful such investments might be, Walker said. He declined to identify the private-equity firms.
While investors may have viewed agriculture as cyclical in the past, they are starting to see it as a “consistent business” because of rising global food demand, Walker said.
U.S. farm cash receipts from major crops will rise 23 percent to $149.6 billion in the 2011-2012 crop year, Ann Duignan, an analyst at JPMorgan Chase & Co. in New York, said in an Aug. 11 report. That increasing cash flow is boosting demand for agricultural equipment made by CNH and competitors Deere & Co. (DE) and Agco Corp. (AGCO), Duignan said.
CNH rose 90 cents, or 2.8 percent, to $33.12 as of 4:16 p.m. in New York Stock Exchange composite trading. The shares have dropped 31 percent this year.
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