TELUS Formally Announces Proagrica Acquisition: Strategic Acquisition or Act of Desperation?
TELUS Formally Announces Proagrica Acquisition - The Daily Scoop
As of March 1, Telus Agriculture & Consumer Goods completed the acquisition of Proagrica.
The industry had been buzzing of the news since late November 2023.
The company says this serves three strategic focus areas:
Bolstering Telus Agronomy: Proagrica's capabilities enhance our existing supply chain order management.
Enhanced data and insights: Enabling organizations to improve their profitability and productivity.
Sustainability: Using the power of technology to minimize inefficiencies, waste and environmental impact.
Overview and Background
In November, there was a buzz that TELUS had acquired Proagrica, which I mentioned in the December 3rd 2023 edition of Upstream.
However, the news had not been publicly released until previous CEO of Proagrica, Graeme McCracken, shared a post on Linkedin with the heading: Telus Ag acquires Proagrica - when big is not beautiful.
Proagrica was previously owned by RELX, a publicly traded entity headquartered in England that is a provider of information-based analytics and decision tools for professional and business customers.
Proagrica is a company that has products for agribusinesses like Farmplan and Sirrus for managing agronomist workflow, leveraging geospatial data, and creating precision recommendations, along with a more recent acquisition in CDMS, a compliance platform that is leveraged heavily within the industry for its label database. Its CDMS asset is one of the most prominent in the ag industry, along with TELUS’ Agrian.
TELUS is a Canadian telecommunications company that embarked on an agricultural and downstream infrastructure software acquisition spree starting in late 2019. They have made close to a dozen acquisitions, including Agrian, Decisive Farming, Muddy Boots, AgIntegrated and TKXS.
TELUS’ stated aim has been to connect the value chain from farm to fork. From their 2020 agriculture launch announcement:
TELUS Agriculture optimizes the food value chain by leveraging data in new ways to increase efficiency, production, and yields, delivering better food outcomes for businesses and the end consumer. Connecting each piece of the agriculture value chain empowers farmers and ranchers, the agri-business industry, and agri-food, consumer goods and retail companies to leverage advanced data systems and artificial intelligence to streamline operations, improve food traceability, and provide consumers with fresher and healthier food.
TELUS has wanted to create an easy button for farmers, agribusinesses, and downstream entities by connecting data, enabling transparency and ultimately, delivering a one stop solution for the entire value chain.
TELUS had a track record of building in the Healthcare industry via its efforts and roll-up that made TELUS Health, which operates as an independent TELUS business unit. While not spun outyet, that could be it’s fate to create shareholder value—something that could have been an approach for the agriculture business.
I think this is an important point, one that was pointed out to me by Graeme McCracken: TELUS’ approach was that of a private equity roll-up— acquiring disparate assets with proven revenue in hopes of integrating and flipping for a profit at a later date. The problem is that if that is the starting point then you are under pressure to find and buy assets focused more on gaining revenue rather than for strategic value.
The common statement heard was, “Well, they did it in Healthcare.”
While there can always be logic behind acquisitions and grand new efforts, the reality is that executing roll-ups is really, really hard. Especially for an organization where that isn’t their core competency (eg: like PE. I talked about this and the reason TELUS is ill-equipped for it in an October 2023 edition) and they are in an adjacent industry (agriculture).
That brings up several signals that things might not be smooth at TELUS, some of which I highlighted early in 2023.
Signals of Struggle
I highlighted when TELUS first announced its foray in agriculture that telecom companies have a history of roll-up failure, too (and well beyond this one example):