Deere & Company (NYSE: DE) announced on June 8, 2007, that they have firmed up an agreement to purchase the Chinese manufacturer, Ningbo Benye Tractor & Automobile Manufacture Co. Ltd. Deere describes the agreement as "definitive" and is now awaiting the approval of the Chinese government. Benye is the largest manufacturer of tractors in southern China, having served that country for over half a century. Deere is looking to take possession of Benye's new 200,000 square meter manufacturing facility, which will substantially increase Deere's Chinese footprint in everything from research to marketing.

This acquisition will expand Deere's product offering in China by adding a line of tractors in the 20 to 50 horsepower range along side their usual 60 to 120 horsepower models. The deal also gives Deere better footing to expand sales efforts in low- to mid-range horsepower models worldwide. "We do have an ambition to grow both our domestic and export market in China," said David Everitt, president of Deere's Agricultural Division in North America, Australia, Asia, and for Global Tractor and Implement Sourcing. "Our decision to acquire Benye provides us an excellent opportunity to align with a high-quality manufacturer of tractors in a horsepower range important to our customers." Deere currently manufactures tractors in the 60 to 120 horsepower range in a joint venture tractor factory, located in Tianjin.

Given the expanding economy in China and the deep cultural roots of that country in farming, it stands to reason that smaller sized tractors will become very popular items as the greater Chinese culture adapts from small scale farming to suburban landscaping. John Deere & Co. is a major world supplier of equipment for construction, farming, irrigation, lawn care, and landscaping. This acquisition is, in my opinion, timed right and perfectly placed.