Farm equipment maker AGCO Corp. likes small, USD 50-USD 100 million acquisitions, and may spend about USD 200 million on deals this year, its CEO said.
"There are no large deals possible," Chief Executive Martin Richenhagen told Reuters in an interview.
In December, Richenhagen told an Italian business newspaper he was interested in rival CNH Global NV, owned by Fiat SpA, but later clarified that this was only a 'theoretical' comment.
"We're in a strong position financially. Debt-to-capital is almost zero, cash flow is very strong, so we're in a position to do those (small) deals without needing banks," Richenhagen said on Tuesday.
Competition is heating up in the farm equipment market, which is riding high on a wave of commodity price increases, forcing companies to look for ways to drive market share gains.
AGCO, valued at around USD 4.8 billion, is the world's third-largest maker of tractors and combines, behind Deere & Co and CNH Global.
Last month, the company said it agreed to buy 80% of Shandong Dafeng Machinery Co, a Chinese combine harvester manufacturer.
"Mostly our strategy is organic growth as we have all the technology we need. But if we can advance faster through an acquisition, we would always seriously look into that," the CEO said.
Answering a question on possible undercutting by rivals, Richenhagen said Agco has always felt some pricing pressure, but there was no such threat as raw material prices would remain strong.
"I would think (raw material) prices in general will hold up pretty stable. So there's no room for big discounts, and I think (product) prices would rather go up."
AGCO has no immediate plans to hike its prices, but any further increase in steel or other key inputs would drive an "extra", Richenhagen said.
AGCO sells its equipment under the Massey Ferguson, Fendt, Valtra and AGCO brand names, among others.
Richenhagen said AGCO is in a strong position in South America and Europe, but needs to grow in North America, where it has around a 10% market share.
"The target in North America is to grow our market share and we want to do that through technology and a better dealer network," he said.
The U.S. agricultural economy is the healthiest in years as rising farm incomes allow farmers to pay off debt and buy land and machinery to meet booming demand for crops and livestock.
AGCO last month reported market-beating quarterly results and raised its full-year outlook, citing strong demand, especially in Western Europe, but its shares have fallen 19% since then, underperforming a sector sub-index, which is down nearly 10%, reflecting volatile global commodity markets.
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