(Bloomberg) -- AGCO Corp., one of the world’s largest tractor makers, will acquire technology assets from Trimble Inc. for $2 billion to boost its offerings in the so-called precision agriculture market.

Under the deal announced by both companies in a statement Thursday, Trimble will carve out its agricultural technology business and turn it into a standalone joint venture, with AGCO owning 85% and Trimble owning 15%.

The move comes as farm machinery makers have been investing more in software that helps growers manage fields with satellite-connected autonomous tractors. Such precision agriculture technology helps farmers maximize yields and also gives manufacturers a crucial source of additional revenue if tractor sales slow.

The deal could help make AGCO, whose brands include Fendt and Massey Ferguson, a more serious competitor to Deere & Co., the global leader in precision farming.

AGCO shares were up 1.7% as of 9:30 a.m. in New York trading.

Read More: Deere Sees ‘Total Autonomy’ on US Corn, Soybean Farming by 2030

“This new entity will create the best mixed-fleet experience across all brands and hundreds of OEMs so farmers can get what they need,” AGCO Chief Executive Officer Eric Hansotia said in an interview, referring to original equipment manufacturers. 

The deal gives AGCO exclusive access to Trimble’s agricultural products, which integrate data from satellites and fields in efforts to maximize crop yields and reduce the use of fertilizer and chemicals.

What Bloomberg Intelligence Says:

AGCO’s purchase of Trimble’s agricultural-technology assets for $2 billion via a joint venture augments its capabilities in the lucrative precision-ag business, and we believe it will enhance the company’s margin profile through the cycle, helping to narrow the gap with Deere and CNH.

AGCO separately said it was placing its grain and protein business under a strategic review. The segment, which sells crop-storage bins and implements for the feed industry, has been pressured in part by a downturn in the cattle sector amid a shrinking herd. The company was considering all options for the business.

Trimble will hold a conference call with investors to discuss the deal at 12:30 p.m. New York time.

(Adds AGCO statement on grain and protein business, and updates shares.)

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