Wirtgen brothers discuss the Deere deal

John Deere‘s acquisition of the Wirtgen Group comes as a bit of a surprise to the global construction materials industry.

With its $5.2 billion purchase of the Wirtgen Group, John Deere gains a construction machinery company with five core brands that had about $2.9 billion in sales in 2016.

Upon completing the sale, Jürgen and Stefan Wirtgen, the managing partners of the Wirtgen Group, offered some collective insight behind their decision to sell the privately held company that was established in 1961.

After 20 years as managing partners, you have decided to sell your company to John Deere, which was an unexpected move. What made you take this step?

When you own a company, at some point you have to ask yourself what will happen to that company after you leave, whether you like it or not. After all, we have a responsibility toward our employees. Our children are simply too young to take on that responsibility. By the time one of them is old enough to take over the leadership, the two of us will be at least 75. We simply have to realize that this is unrealistic.

Did money play a part in the decision?

No, it didn’t. Of course, you don’t pass on your life’s work without a great deal of thought. After all, this company has been the focal point for two generations of our family. We’ve put our heart and soul into it. But what mattered most to us was ensuring that the Wirtgen Group, along with its employees, would be able to endure over the long term, even when we are no longer active.

Did you consider other options?

Yes, we did. But in the end, we came to the conclusion that it would be best for the Wirtgen Group to have a stable owner who knows the business, who understands the needs of the employees and customers and who is fully committed to the company’s long-term success.

How long did the decision process take?

It kept us busy for quite some time. Time and again we weighed up the options and asked ourselves whether our decision would be right for the long term. The specifics then emerged over the last 12 months.

Were there other potential buyers?

Of course. On average we received one offer per year.

So why did you make the decision at this particular time?

Right from the start we ruled out numerous interested parties – companies in our own sector, because we didn’t want to sell to competitors, as well as hedge funds and private equity companies, because they couldn’t have guaranteed a secure future for the Wirtgen Group. This considerably lowered the number of suitable candidates, and in the end, John Deere was the one company we wanted to consider. Given the requirements, the timing is not a matter of choice. When John Deere approached us about a year ago and we had our first talks, both sides immediately realized that it was a match.

You say you take a long-term perspective. Are the jobs secured in the long term?

Both of us strongly believe that the integration into John Deere will be fruitful over the long term, securing a stable future for all employees. For this reason, John Deere has given its firm assurance of a job guarantee to all Wirtgen Group employees for the coming years.

Will you keep any shares in the company?

No, we won’t.

Will the Wirtgen Group and its product brands remain independent?

John Deere will build on the strong name of our five premium brands and on the steadfast loyalty of our customers. As a result, the companies of the Wirtgen Group will continue to be managed independently to a high degree.

Why did John Deere acquire the Wirtgen Group?

With this acquisition, John Deere wants to further expand its construction division, which will make it a leader not only in the agriculture market, but also in road construction. The integration will also enable John Deere to lend a whole new weight to its construction division and to generate additional growth.

Who is going to take your position in the future?

The two of us will stay at the company until the end of the year. During this period, until the transaction is completed at the end of 2017, our management responsibilities will be passed on to our proven management team. This means Mr. Rainer Otto, Dr. Günther Hähn and Mr. Frank Betzelt will have taken over management of the Wirtgen Group by the end of 2017 and, after this period, will be under the leadership of John Deere’s Domenic Ruccolo.

In what ways can the Wirtgen Group benefit from John Deere?

When two global market leaders work together, the positive effects can be enormous. New opportunities will open up in every field. The product lines of the two companies complement each other perfectly, which will lead to an unprecedented range of customer solutions as well as access to new markets, new groups of customers and completely new opportunities for collaboration. Take, for example, the important topic of customer financing, where John Deere has a very strong international position through its own financing company John Deere Finance. In this respect, the Wirtgen Group will benefit especially in markets where our current partner Deutsche Leasing is not yet present.

How has your team reacted so far?

At first, such an unexpected piece of news causes a sense of dismay. That’s not surprising, given the fact that we’ve worked together for so many years. Everyone is influenced by emotions in such moments. But ultimately the entire team has responded, as always, with open-mindedness and courage, and by looking ahead to the future.

How do you see the future of the Wirtgen Group with John Deere?

The path of growth will continue. Anything else would be completely illogical. In the medium term, the Wirtgen Group will generate 4 billion [euros] of annual revenue. Thanks to the integration into John Deere, we’re now a global leader in the manufacture of construction machines, not only in terms of market shares, but also in terms of overall company size.

Considering that we started out with just one concrete crusher, our “Klöpper,” that’s truly incredible.

What do the Wirtgen Group and John Deere already have in common?

Both companies are global market leaders and 100 percent focused on a partnership of trust with their customers. Our guiding principle, “Close to our customers,” will therefore be upheld, while the Wirtgen Group customers will remain the focal point of our team’s thoughts and activities. That’s extremely important to us.

Information for this article courtesy of the Wirtgen Group.