CNH Industrial NV, a company well known for making farm equipment and machinery, now has to figure out what do with some newly acquired plastic film, sheet and balloon operations.
CNH, the company behind such brand names as Case and New Holland in the agriculture industry, was attracted to Raven Industries Inc. by the company's technology that allows equipment to operate autonomously.
But CNH also is acquiring two other Raven divisions, one that specializes in film and sheet and another that makes large balloons used for applications including communications, logistics and radar. Plastics, not digital agriculture technology, is actually the largest business segment for Sioux Falls, S.D.-based Raven.
The company's engineered films division posted sales of $163 million for the 12 months prior to a June announcement of the purchase by CNH. That segment posted 19 percent earnings before interest, taxes, depreciation and amortization over the same period.
The company's Aerostar balloon business had $51 million in sales and 11 percent EBITDA over the same 12-month period. The agricultural segment posted $160 million in sales during the same 12-month period.
"While engineered films and Aerostar have a less obvious fit with CNH Industrial, their specialized technological capabilities and strong market position in their respective sectors make them strong and consistent generators of value," CEO Scott Wine said on a conference call earlier this year.
"Engineered films delivers products such as ag storage covers, construction barriers and pond liners. It has been consistently generating strong returns and has significant growth potential due to its specialized and competitive position in the market," he said.
CNH readily admitted it was less familiar with plastics side of the Raven business when the $2.1 billion deal was first announced.
"We intend to undertake a strategic review of Aerostar and engineered film segments to best position these businesses for continued success," the CEO said during the conference call. CNH reiterated that position on Nov. 30 in announcing completion of $58-per-share deal acquisition of Raven.
Raven put itself up for sale about three months before the two sides struck a deal in June and that process included multiple rounds of bidding, CNH said.
"I do think the primary focus is ATD [Applied Technology Division] and the capabilities that we are getting there," the CEO said.
He promised a "very strong strategic review" of the other segments as CNH looks for the "best opportunities" for those operations. The most recent Plastics News listing of film and sheet makers in North America indicated Raven was No. 50 and had seven plant locations.
CNH's other brands in the machinery and transportation markets include Steyr, Iveco, Heuliez, Magirus, and FPT Industrial.