Deere & Co. signed a definitive agreement to sell John Deere Renewables LLC, its wind energy business, to Exelon Generation Co., a wholly owned subsidiary of Exelon Corp. The acquisition was valued at about $900 million, with the initial price being $860 million, with a provision for Deere to get up to another $40 million once construction begins on planned projects.
Deere said the sale will result in an after-tax charge of about $25 million in its fourth-quarter results. The charge was not reflected in Deere’s fourth-quarter earnings forecast of about $375 million announced August 18.
“As Deere sharpens its own strategic focus, we have concluded that the company’s resources are best invested in growing our core equipment businesses around the world,” said Samuel Allen, Deere chairman and CEO. “We have chosen to place the wind portfolio with Exelon in part due to its demonstrated leadership in the energy industry.”
John Deere Renewables includes 36 completed projects in eight states with an operational capacity of 735 megawatts. The sale agreement includes the completed projects plus others in development.
Deere expects the transaction to close within the 2010 calendar year, subject to regulatory approvals.
According to reports, Deere invested $1 billion on wind energy projects over the past five years, regarding the business as an extension of its agricultural work. However, stimulus money that helped expand capacity last year is running out and Congress has yet to enact a nationwide standard, slowing the potential of wind energy projects.