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(Reuters) - Deere & Co (DE.N) said on Tuesday it has acquired a majority stake in Hagie Manufacturing, allowing the farm and construction machinery manufacturer to enter the high-clearance sprayer market.
Deere does not currently produce a "high-clearance" sprayer which allows farmers to spray fields with fertilizers and pesticides later in the growing season.
Hagie, a leading U.S. crop sprayer manufacturer, employs about 400 people at its Clarion, Iowa manufacturing facility. It will continue to make sprayers under the Hagie brand but with no dealerships, the company will have access to Deere's global customers.
"It is notable that Hagie basically put itself on sale, because they had a financial advisor involved," said Jim Corridore, analyst at S&P Global Market Intelligence.
NCP, Inc, a Des Moines, Iowa investment bank was the exclusive financial advisor to Hagie. Neither Deere nor NCP would comment on the size of the deal.
"The fact that they were looking to get an investor involved, they probably needed the funds given how bad the sector has been and for how long it has been bad," Corridore said.
The joint venture is another sign of consolidation in the agriculture sector as the U.S. farm economy enters its third-straight down year.
Deere and other agriculture equipment manufacturers have continued to invest millions in acquisitions, research and development even as demand for farm equipment and machinery tapers off in the wake of the weakest U.S. farm economy in 30 years.
In November, Deere said it would purchase Monsanto Co's (MON.N) Precision Planting farm equipment business and run it as a independent subsidiary. The farm machinery market has moved more toward "precision agriculture," a process that allows farmers to measure and manage precise amounts of inputs, such as seed, fertilizer and pesticide, in an effort to keep costs low.
The agreement between Hagie and Deere allows Deere to add precision technology to Hagie sprayers.
Hagie's sales and service will be integrated into Deere's global distribution channel over the next 15 months, a Deere statement said.
Due to slowed agriculture equipment sales in the wake of the sluggish farm economy, Deere has already announced hundreds of layoffs from its own facilities.
"We are encouraging our independent dealers to consider employing Hagie field staff for their expertise in high clearance sprayers," a Deere spokesperson said.
Deere's shares were up 0.87 percent at $80.26 in afternoon trade. The Dow Jones Industrial Index .DJI was 17586.96, up 0.29 percent.
Reporting by Meredith Davis; Editing by Marguerita Choy