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ACQUISITIONS AND DISPOSITIONS | 12 Months Ended
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Oct. 30, 2022
ACQUISITIONS AND DISPOSITIONS |
ACQUISITIONS AND DISPOSITIONS | 3. ACQUISITIONS AND DISPOSITIONS Acquisitions Kreisel In February 2022, the company acquired majority ownership in Kreisel Electric Inc. (Kreisel), a pioneer in the development of immersion-cooled battery technology. The Austrian company manufactures high-density, high-durability electric battery modules and packs for high-performance and off-highway applications and has created a battery-buffered, high-powered charging infrastructure platform. The transaction includes a call option to purchase the remaining ownership interest in Kreisel in 2027. The minority interest holders also have a put option that would require the company to purchase the holder’s ownership interest in 2027. The put and call options cannot be separated from the noncontrolling interest. Due to the redemption features, the minority interest is classified as redeemable noncontrolling interest in the company’s consolidated balance sheets. The total cash purchase price was $276 million, consisting of $253 million for the acquired equity interests, $21 million to reduce the option price, and customary working capital adjustments, net of cash acquired. The preliminary fair values assigned to the assets and liabilities of the acquired entity in millions of dollars, which is based on information as of the acquisition date and available at October 30, 2022 follows: ​
​ | ​ | ​ | ​ | ​
​ | ​ | February 2022 | ​
Trade accounts and notes receivable | ​ | $ | 2 | ​
Other receivables | ​ | ​ | 11 | ​
Inventories | ​ | ​ | 11 | ​
Property and equipment | ​ | ​ | 11 | ​
Goodwill | ​ | ​ | 218 | ​
Other intangible assets | ​ | ​ | 178 | ​
Other assets | ​ | ​ | 6 | ​
Total assets | ​ | $ | 437 | ​
​ | ​ | ​ | ​ | ​
Accounts payable and accrued expenses | ​ | $ | 26 | ​
Deferred income taxes | ​ | ​ | 39 | ​
​ | ​ | ​ | ​ | ​
Redeemable noncontrolling interest | ​ | $ | 96 | ​
​ The identifiable intangible assets were related to technology, trade name, and customer relationships with a weighted average amortization period of 12 years. The goodwill is not deductible for income tax purposes. Kreisel will be allocated amongst the company’s production and precision agriculture, small agriculture and turf, and construction and forestry segments. Excavator Factories In March 2022, the company acquired full ownership of three former Deere-Hitachi joint venture factories and began new license and supply agreements with Hitachi Construction Machinery Co., Ltd. (Hitachi). The two companies also ended their joint venture manufacturing and marketing agreements. The former joint venture factories continue to manufacture Deere-branded construction excavators and forestry equipment. Through a new supply agreement with Hitachi, Deere continues to offer a full portfolio of excavators. Deere’s marketing arrangement for Hitachi-branded construction excavators and mining equipment in the Americas ended with Hitachi assuming distribution and support of these products. John Deere dealers may continue to support their existing field population of Hitachi-branded excavators. With the completion of this acquisition, the company now has complete control over its excavator design, product, and feature updates, making it possible to more rapidly respond to customer requirements and integrate excavators with other construction products in the John Deere product portfolio. The company can leverage technology developed for other product lines and production systems across the enterprise and extend those advanced solutions to Deere-designed excavators, strengthening the entire product portfolio. The total invested capital is as follows in millions of dollars: ​
​ | ​ | ​ | ​ | ​
​ | ​ | March 2022 | ​
Cash consideration for factories | ​ | $ | 205 | ​
Cash consideration for license agreement | ​ | ​ | 70 | ​
Deferred consideration | ​ | ​ | 271 | ​
Total purchase price consideration | ​ | ​ | 546 | ​
Less: Cash obtained | ​ | ​ | (187) | ​
Less: Settlement of intercompany balances | ​ | ​ | (113) | ​
Net purchase price consideration | ​ | ​ | 246 | ​
Fair value of previously held equity investment | ​ | ​ | 444 | ​
Total invested capital | ​ | $ | 690 | ​
​ The total purchase price consideration includes deferred consideration that will be paid as the company purchases Deere-branded excavators, components, and service parts from Hitachi under the new supply agreement with a duration that ranges from 5 to 30 years. The deferred consideration represents the price increases under the new supply arrangement. Excluding inflation adjustments, the price increases for products to be acquired by the company from Hitachi are as much as 27 percent higher than the prior supply arrangement. At October 30, 2022, the net present value of the deferred consideration was approximately $236 million, subject to changes in market conditions, developments in the company’s product offerings, and sourcing changes. The company financed the acquisition and associated transaction expenses from cash on hand. The fair value of the previously held equity investment created a non-cash gain of $326 million (pretax and after-tax), which was recorded in Other income and included in the construction and forestry segment’s operating profit. Prior to the acquisition, the company purchased Deere and Hitachi-branded excavators, components, and parts from the Deere-Hitachi joint venture factories for sale to John Deere dealers. These purchases were included in Cost of sales, while the sales to John Deere dealers were included in Net sales. Cost of sales also included profit-sharing payments to Hitachi in accordance with the previous marketing agreements. Following the acquisition, Net sales only includes the sale of Deere-branded excavators to John Deere dealers, while Cost of sales reflects market pricing to purchase and manufacture excavators, as well as the related components and service parts. The preliminary fair values assigned to the assets and liabilities of the acquired factories in millions of dollars, which are based on information as of the acquisition date and available at October 30, 2022, follow: ​
​ | ​ | ​ | ​ | ​
​ | ​ | March 2022 | ​
Other receivables | ​ | $ | 29 | ​
Inventories | ​ | ​ | 286 | ​
Property and equipment | ​ | ​ | 180 | ​
Goodwill | ​ | ​ | 529 | ​
Other intangible assets | ​ | ​ | 70 | ​
Deferred income taxes | ​ | ​ | 56 | ​
Other assets | ​ | ​ | 3 | ​
Total assets | ​ | $ | 1,153 | ​
​ | ​ | ​ | ​ | ​
Accounts payable and accrued expenses | ​ | $ | 300 | ​
Long-term borrowings | ​ | ​ | 163 | ​
Total liabilities | ​ | $ | 463 | ​
​ The identifiable intangible assets were related to technology with a 10-year amortization period. The goodwill is not deductible for income tax purposes. The excavator factories will be reported in the company’s construction and forestry segment. Other Acquisitions In 2022, the company acquired AgriSync Inc. (AgriSync), a technology service provider; an 80 percent stake in both SureFire Ag Systems, Inc. and SureFire Electronics, LLC (renamed after acquisition and collectively referred to as SurePoint), which design and manufacture liquid fertilizer application and spray tendering systems; a 40 percent equity method investment in GUSS Automation LLC (GUSS Automation), a pioneer in semi-autonomous orchard and vineyard sprayers; LGT, LLC (Light), which specializes in depth sensing and camera-based perception for autonomous vehicles; and an equity method investment in InnerPlant, Inc. (InnerPlant), an early-stage biotech company. The combined cost of these acquisitions was $134 million, net of cash acquired of $3 million. The preliminary asset and liability fair values at the respective acquisition dates follow in millions of dollars: ​
​ | ​ | ​ | ​ | ​
​ | ​ | October 2022 | ​
Trade accounts and notes receivable | ​ | $ | 8 | ​
Inventories | ​ | ​ | 8 | ​
Property and equipment | ​ | ​ | 4 | ​
Goodwill | ​ | ​ | 53 | ​
Other intangible assets | ​ | ​ | 21 | ​
Other assets | ​ | ​ | 60 | ​
Total assets | ​ | $ | 154 | ​
​ | ​ | ​ | ​ | ​
Accounts payable and accrued expenses | ​ | $ | 6 | ​
Deferred income taxes | ​ | ​ | 5 | ​
Total liabilities | ​ | $ | 11 | ​
​ | ​ | ​ | ​ | ​
Redeemable noncontrolling interest | ​ | $ | 9 | ​
​ The identifiable intangible assets were related to trade name, technology, and customer relationships with a weighted average amortization period of 7 years. AgriSync was allocated amongst the company’s production and precision agriculture, small agriculture and turf, and construction and forestry segments, while SurePoint, Light, and InnerPlant were allocated to the production and precision agriculture segment. GUSS Automation was assigned to the small agriculture and turf segment. Bear Flag In August 2021, the company acquired Bear Flag Robotics, Inc. (Bear Flag) to further accelerate Deere’s development and delivery of advanced technology. Bear Flag’s technology is complementary to other Deere technology efforts and enables autonomous tractor operations. The total cash purchase price before final adjustments, net of cash acquired of $4 million, was $225 million, with an additional $25 million to be recognized as compensation expense over the four-year post-acquisition service period. In addition to the cash purchase price, $19 million of liabilities were assumed. The asset and liability fair values at the acquisition date in millions of dollars follow: ​
​ | ​ | ​ | ​ | ​
​ | ​ | August 2021 | ​
Property and equipment | ​ | $ | 1 | ​
Goodwill | ​ | ​ | 189 | ​
Other intangible assets | ​ | ​ | 54 | ​
Total assets | ​ | $ | 244 | ​
​ | ​ | ​ | ​ | ​
Accounts payable and accrued expenses | ​ | $ | 1 | ​
Deferred income taxes | ​ | ​ | 18 | ​
Total liabilities | ​ | $ | 19 | ​
​ The identified intangible was related to technology with a seven-year amortization period. The goodwill will not be deductible for tax purposes. Unimil In September 2020, the company acquired Unimil, a leading Brazilian company in the after-sales service parts business for sugarcane harvesters, which is based in Piracicaba, Brazil. The total cash purchase price, net of cash acquired of $5 million, was $66 million, with $6 million funded to an escrow to secure certain indemnity obligations. In addition to the cash purchase price, $14 million of liabilities were assumed. The asset and liability fair values at the acquisition date in millions of dollars follow: ​
​ | ​ | ​ | ​ | ​
​ | ​ | September 2020 | ​
Trade accounts and notes receivable | ​ | $ | 5 | ​
Other receivables | ​ | ​ | 2 | ​
Inventories | ​ | ​ | 10 | ​
Property and equipment | ​ | ​ | 22 | ​
Goodwill | ​ | ​ | 28 | ​
Other intangible assets | ​ | ​ | 13 | ​
Total assets | ​ | $ | 80 | ​
​ | ​ | ​ | ​ | ​
Accounts payable and accrued expenses | ​ | $ | 5 | ​
Deferred income taxes | ​ | ​ | 9 | ​
Total liabilities | ​ | $ | 14 | ​
​ The identified intangibles were related to customer relationships, trade name, and a non-compete agreement. The weighted-average amortization period is approximately nine years. The goodwill is not deductible for tax purposes. For the acquisitions, the goodwill was the result of future cash flows and related fair value exceeding the fair value of the identified assets and liabilities. The results of these operations have been included in the company’s consolidated financial statements, and the pro forma results of operations as if these acquisitions had occurred at the beginning of the current or comparative fiscal year would not differ significantly from the reported results. Dispositions In September 2020, the company sold its German lawn mower business. At the time of the sale, total assets were $26 million, which were recorded in “Other assets,” and total liabilities were $5 million, which were recorded in “Accounts payable and accrued expenses.” No cash proceeds were received, resulting in a loss on sale, including transaction costs, of $24 million pretax and after-tax. The loss was recorded with a pretax and after-tax accrual recognized in the third quarter of 2020 when a definitive sale agreement was finalized. The loss was recorded in “Other operating expenses” in the small agriculture and turf segment.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 + Details
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