RAVN Stock Price Increases Over 45% Pre-Market: Why It Happened

By Amit Chowdhry ● June 21, 2021
  • The stock price of Raven Industries, Inc. (NASDAQ: RAVN) increased by over 45% pre-market. This is why it happened.

The stock price of Raven Industries, Inc. (NASDAQ: RAVN) increased by over 45% pre-market. Investors are responding positively to CNH Industrial N.V. (NYSE: CNHI / MI: CNHI) announcing that it entered into an agreement to buy 100% of the capital stock of Raven Industries, which is a US-based leader in precision agriculture technology for $58 per share — representing a 33.6% premium to the Raven Industries 4-week volume-weighted average stock price and $2.1 billion Enterprise Value. 

The deal will be funded with available cash on hand of CNH Industrial. And the closing is expected to occur in the fourth quarter of 2021, subject to the satisfaction of customary closing conditions, including approval of Raven shareholders and receipt of regulatory approvals.

The acquisition builds on a long partnership between the two companies and will further enhance CNH Industrial’s position in the global agriculture equipment market by adding strong innovation capabilities in autonomous and precision agriculture technology.

Based in Sioux Falls, South Dakota, Raven Industries is organized into 3 business divisions: Applied Technology (precision agriculture), Engineered Films (high-performance specialty films) and Aerostar (aerospace) with consolidated net sales of US$ 348.4 million for the 12 months ended January 31, 2021. And the company is a global technology partner for key strategic OEMs, agriculture retailers and dealers. The deal is expected to generate approximately $400 million of run-rate revenue synergies by the calendar year 2025, resulting in $150 million of incremental EBITDA from synergies.

The Engineered Films and Aerostar segments are industry leaders in the high-performance specialty films and stratospheric platform industries, respectively. And CNH Industrial believes they represent attractive independent businesses with excellent near and long-term potential. Plus CNH Industrial plans to undertake a strategic review of each business to best position them for future success and maximize shareholder value.

CNH Industrial is not expecting the proposed acquisition will have any impact on its guidance for 2021. And the acquisition is expected to be funded with Group consolidated cash not affecting third party debt of industrial activities. 

KEY QUOTES:

“Precision agriculture and autonomy are critical components of our strategy to help our agricultural customers reach the next level of productivity and to unlock the true potential of their operations. Raven has been a pioneer in precision agriculture for decades, and their deep product experience, customer-driven software expertise, and engineering acumen offer a significant boost to our capabilities. This acquisition emphasizes our commitment to enhance our precision farming portfolio and aligns with our digital transformation strategy. The combination of Raven’s technologies and CNH Industrial’s strong current and new product portfolio will provide our customers with novel, connected technologies, allowing them to be more productive and efficient.”

“Raven Industries’ capabilities, innovation culture, entrepreneurial spirit and engineering talent are impressive and will continue to thrive as part of the CNH Industrial family. Sioux Falls is and will continue to be a true center of excellence. We are incredibly excited to collaborate in bringing our customers more integrated precision and autonomous solutions, not only to improve productivity and profitability, but also promote more sustainable solutions and environmental stewardship. Together, our teams will create a stronger business for our employees, dealer network, and customers, enabling us to shape the future of agriculture, augment our world-leading sustainability credentials, and maximize our growth opportunities.”

— Scott Wine, Chief Executive Officer, CNH Industrial

“Our Board and Management are excited about this partnership and what it means for our future. For 65 years, our company has been committed to solving great challenges. Part of that commitment includes delivering groundbreaking innovation by developing and investing in our core capabilities and technology. By coming together with CNH Industrial, we believe we will further accelerate that path as well as bring tremendous opportunities and value to our customers — once again fulfilling our purpose to solve great challenges. Our relationship with CNH Industrial has expanded over decades, and we have a deep respect for one another and a shared commitment to transform agriculture practices across the world. We look forward to CNH Industrial leveraging the Raven talent and culture, as well as the Sioux Falls community, as part of their vision and future success.”

— Dan Rykhus, President & Chief Executive Officer for Raven Industries

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.