Acquisition

Chore Time Brock (CTB) acquires Agro Logic . Is that news? Yes indeed, and it is more than just "American multinational buys a majority share of a small Israeli enterprise".

Both companies are known in the poultry industry: the first as a provider of all kinds of housing and feed storage systems for the livestock industry, and the second as a manufacturer of electronic systems for weighing birds and climate control.

The first response to this news item was: why in heaven would CTB buy this company - knowing that it already owns three companies/brands that cover the same area?

Before drawing a conclusion, I asked a few insiders about the meaning of this acquisition. This quickly told me that CTB wants to operate globally in different market segments, with the domestic USA operation possibly following a different strategy from the worldwide approach.

Agro Logic excellently fulfils the need to serve a large segment of the emerging markets, where there is a need for simple and reliable technology at an affordable price.

This perfectly characterises the issue most advanced US and EU companies struggle with. They have grown with their home market by supplying high tech systems. That is, systems that require well-educated staff to operate them; systems that can provide the information modern farm management demands.

By developing those systems, companies of that scale tend to concentrate on modern producers, losing contact with the less advanced producers in their own country as well as overseas. We have often seen that some companies recognise this in time to develop a strategy for those clients or, as CTB has done, to acquire a small company that fills that gap.

Unique in this acquisition is that Agro Logic fits well in the CTB club, but simultaneously ads a new element to the know-how base of the CTB electronics family; the knowledge of GMS and GPRS in data transfer. Fancom, CTB's top segment provider of electronic control systems, announced that it is going to make a major step in becoming a provider of management information technology for the intensive livestock industry. This requires the use of new technology, especially in transferring large amounts of data over a long distance. And that is a field of interest where Agro Logic could be of help, which means that this acquisition serves both ends of CTB's electronics group. An interesting development isn't it? But will this insight lead more companies to follow CTB's strategy? This could well be the case.