AGCO’s Tender Offer Expires

Zacks

Agricultural equipment maker AGCO Corporation (AGCO) has announced the expiration of the tender offer for its outstanding 1 1/4% Convertible Senior Subordinated Notes due 2036.

According to the terms of the notes, each holder had the right to make AGCO purchase on Jan 2, 2014, all or part of such holder’s notes at a price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest.

Recently, AGCO’s Board sanctioned the repurchase of shares worth up to $500 million. This is consistent with AGCO's commitment to increase shareholder value through continuous investments in the business.

AGCO's earnings in third-quarter 2013 improved 32% year over year to $1.27 per share. Revenues also increased 7.9% year over year to $2.5 billion, mainly driven by strong market demand in South America and the Asia Pacific region.

Despite improved results, AGCO reiterated its full-year 2013 earnings per share guidance of $6.00. The company also maintained its full-year revenue outlook at $10.8–$11 billion. Strong growth in South America and modest performance in North America is expected to be offset by moderate declines in Western Europe.

AGCO is expected to benefit from strong free cash flow and its focus on earnings growth. The company should also gain from regular upgrading of high-tech solutions for farmers, which will provide a competitive edge, international expansion plans, healthy farm income and increased demand for grain storage.

However, robust demand, which had been benefiting North America results, may be unsustainable going forward. Furthermore, margin headwinds remain in the form of increased engineering expenditures to meet Tier 4 emission requirements.

Duluth, Ga.-based AGCO is a global leader involved in the design, manufacture and distribution of agricultural machinery. AGCO supports productive farming through a wide range of tractors, combines, hay tools, sprayers, forage equipment, tillage implements, grain storage and protein production systems, and other related replacement parts.

AGCO currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the machinery-farming sector include Kubota Corporation (KUBTY) with a Zacks Rank #1 (Strong Buy), and Alamo Group, Inc. (ALG) and Lindsay Corporation (LNN) with a Zacks Rank #2 (Buy).

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