Summary
Deere & Company (DE) announced on August 31, 2010, that it has entered into a definitive agreement to sell its wind energy business, John Deere Renewables, LLC, to Exelon Generation Company, LLC for $900 million, including potential earn-out provisions. This strategic decision aligns with Deere's focus on strengthening its core equipment businesses. The sale is expected to result in an after-tax charge of approximately $25 million, which was not previously factored into the company's fourth-quarter earnings forecast. The proceeds from this sale will be integrated into Deere's general corporate funds and will be utilized according to its established cash deployment policy. This policy prioritizes maintaining the company's single-A credit rating, making necessary investments in its core operations and defined benefit plans, and subsequently returning capital to shareholders through a sustainable and increasing dividend, followed by share repurchases. The company has also recently increased its dividend and engaged in share repurchases, with this sale expected to further support its share repurchase program.
Key Highlights
- 1Deere & Company is selling its wind energy business, John Deere Renewables, LLC, to Exelon Generation Company, LLC.
- 2The sale agreement is valued at $900 million, including earn-out provisions.
- 3The transaction is expected to result in an approximate $25 million after-tax charge in the fourth quarter.
- 4This charge was not included in Deere's previously announced fourth-quarter earnings forecast of approximately $375 million.
- 5The sale reflects Deere's strategic focus on core equipment businesses.
- 6Proceeds will be used to maintain the company's 'single A' credit rating, invest in its business, fund defined benefit plans, and return capital to shareholders via dividends and share repurchases.
- 7The transaction is subject to regulatory approvals and is anticipated to close within the 2010 calendar year.