Lely-agco-deal Lely

Agco makes move to buy Lely Forage Division

Acquisition beefs up global forage equipment position for the diversified manufacturer

Editor's Note: This story was updated with a statement from Lely on this transaction.

Agco is adding another brand to its stable. The company, which was built through a wide series of acquisitions since the 1980s, has announced it has reached an agreement in principle acquire the forage division of Lely Group.

Lely's forage division, according to Agco, 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.

Lely has had a long-standing relationship with Vermeer in the United States. In fact, Lely Group has its U.S. location in Pella, Iowa. Late in 2016, Vermeer announced it has sold its minority stake in the Lely group. The two companies had collaborated on a range of projects over two decades, but according to a release of that announcement "this move will allow each organization to focus on their respective core markets."

Lely and Vermeer continue to work together to develop forage products.

Lely is also known for its production of high-end, high-tech dairy equipment. This is a separate division from the Forage Group and is not part of the Agco acquisition.

Lely issued a statement from Alexander van der Lely, CEO: "Lely intends to focus entirely on its role as innovator in the field of robotics, 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 primarly based on automation with the aid of robots."

In a statement from Agco, Martin Richenhagen, chairman, president and CEO, said: "The integration of Lely's industry leading competence in hay and forage technology will further strengthen Agco's full line product offering."

In the United States, Agco manufactures and markets the Hesston brand of hay and forage equipment. Adding Lely products to the line-up would broaden the haytool offering globally.

This sale will impact Lely employees in Europe, and the company is working on how employees are treated through the transaction.

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