Divestiture

6 Months Ended

Jun. 28, 2024

Discontinued Operations and Disposal Groups [Abstract]

Divestiture

NOTE 4. DIVESTITURE

On September 28, 2023, we executed a Sale and Contribution Agreement with AGCO that provided for the formation of a joint venture, called PTx Trimble, that operates in the mixed fleet precision agriculture market. The agreement was amended and restated on March 31, 2024, and the transaction closed on April 1, 2024. Under the terms of the agreement, we contributed our Ag business, excluding certain GNSS and guidance technologies, to PTx Trimble, an LLC. Following the closing of the transaction, we own 15% and AGCO owns 85% of PTx Trimble. The agreement provides AGCO with a call option and Trimble with a put option with respect to our retained interest in PTx Trimble. Ag was reported as a part of our Field Systems segment.

Upon closing of the transaction in the second quarter of 2024, we received $1.9 billion of cash proceeds from AGCO, subject to working capital adjustments. As a result, we deconsolidated $457.3 million of net assets, including $357.4 million of goodwill, and recognized a pre-tax gain of $1.7 billion. The gain included $275.6 million for our retained 15% ownership interest in PTx Trimble, which is reported as an equity method investment. The fair value of our equity method investment was determined by using a combination of the equity value, primarily based on the transaction price, and an option pricing model for a put and call option.

In addition to forming PTx Trimble, the parties concurrently entered into agreements that included the following:

•a seven-year renewable supply agreement (the “Supply Agreement”) through which we will provide key GNSS and guidance technologies to PTx Trimble for use in professional agriculture machines sold by AGCO, on an exclusive basis with limited exceptions;

•a technology transfer and license agreement to govern the licensing of certain non-divested intellectual property and technology for use by PTx Trimble in the agriculture field and, upon expiration of the Supply Agreement, to govern fixed and variable royalty payments made to us by PTx Trimble;

•a trademark license agreement to govern the licensing of certain Trimble trademarks for use by PTx Trimble in the agriculture field;

•a master sale and distribution agreement through which PTx Trimble will serve as our channel partner for positioning services in the agriculture market; and

•a transition services agreement to provide contract manufacturing services for the divested products for two years following the closing of the transaction.