TYM Acquisition of Kukje: Any Speculation On Branson Future

[airbiscuit]

We had a local dealer that sold Farmtrac. When they dissolved (and became an orphan tractor), he was looking for a different brand to carry. He originally looked into TYM because he thought the tractors were good, but passed because he said their parts availability was bad. He ended up carrying Mahindra and seems happy with that decision. TYM recently bought out Branson (who bailed on Century and Montana [who bailed on Farmtrac] tractor brands).

I'm not saying they both go away. I'm just wondering if the mother ship (TYM) will keep 2 brands, 2 manufacturing facilities, 2 sets of overhead, etc. I don't think it will happen tomorrow, but I could see the following take place ...

Year
5...............................,,TYM and Branson
6 single brand....... TYM/Branson
7...................... TYM/Branson
8................ TYM/Branson
9........... TYM

Granted, this is pure speculation on my part, but this scenario is not so different from other companies being bought out. One would think that if this did happen, they would combine the best of both brands and continue parts support. I have seen company logos /brands follow that same path. If Branson (or TYM for that matter) are serious about their futures, they will amp up their parts availability, online parts look ups, etc. and get more dealers like Dave's Tractor.

Branson owners seem to like their tractors and that's cool. That said, there will be some irony if Branson becomes an orphan tractor after they made other brands orphans. I'm just saying that corporations do what corporations do.

 

[ptsg]

It has been 2 years, maybe close to 3 since TYM bought Branson. The only thing that came out of that, was that little 19hp Branson tractor that is actually a TYM tractor.

We can't really compare Branson to Farmtrac, Montana or Century. Don't forget that Branson still builds tractors for John Deere among some others like McCormick, so it's not a small company by any means and has lots of history, which Farmtrac, Montana or Century really hasn't since they just bought some tractors and just put some stickers with their brand.

I'm willing to say that Branson might be as big as a company as TYM. In the European market Branson seems way stronger than TYM. In the US market it seems that TYM is bigger.

Branson just launched some new tractors for the 80-100HP range, updated the 25 series and launched the F series with a cab.

Either way, I don't think any of the two will disappear any time soon. Branson still looks like it still runs as independent company.

 

[bigcut]

It has been 2 years, maybe close to 3 since TYM bought Branson. The only thing that came out of that, was that little 19hp Branson tractor that is actually a TYM tractor.

We can't really compare Branson to Farmtrac, Montana or Century. Don't forget that Branson still builds tractors for John Deere among some others like McCormick, so it's not a small company by any means and has lots of history, which Farmtrac, Montana or Century really hasn't since they just bought some tractors and just put some stickers with their brand.

I'm willing to say that Branson might be as big as a company as TYM. In the European market Branson seems way stronger than TYM. In the US market it seems that TYM is bigger.

Branson just launched some new tractors for the 80-100HP range, updated the 25 series and launched the F series with a cab.

Either way, I don't think any of the two will disappear any time soon. Branson still looks like it still runs as independent company.

ptsg, Do you think TYM bought Branson for their engine mfg. capabilities ? airbiscuit makes some vali points, regarding the duplication of capabilities.

I come from a consulting background with a focus on strategy, so it continues to puzzle me as to TYM's thinking. One of my guesses is that TYM got Branson for next to nothing, based on how long they were for sale and how bad their parent wanted to get rid of them. But, even if my speculation is correct, it doesn't address what and how TYM as a company will use/integrate Branson into to the fold.

If there has been little executive movement within Branson, to me, it would indicate that TYM plans to continue to operate with them in an independent manner.

I was hoping that "Dave", from Dave's Tractors, could offer us some thoughts.

 

[GirlWhoWantsTractor]

ptsg, Do you think TYM bought Branson for their engine mfg. capabilities ?

TYM bought Kukje, a tractor manufacturer who made Branson-branded tractors. Kukje is the manufacturing company; "Branson" is the brand name. TYM stated in press releases that this purchase made them the largest tractor manufacturer in S. Korea, a long-time corporate goal of theirs apparently. Since the Branson name is not very dominant in the market, I would guess their main goal was as you stated: to acquire the manufacturing assets, which apparently are considerable.

I truly hope for the sake of Branson owners that the brand continues, but if I have to lay down a 5-dollar bet right now, I'm kinda with airbiscuit on this one.

The GOOD news is, TYM is now the largest tractor manufacturer in S. Korea. Therefore, TYM parts are likely to remain widely available.

 

[bigcut]

TYM bought Kukje, a tractor manufacturer who made Branson-branded tractors. Kukje is the manufacturing company; "Branson" is the brand name. TYM stated in press releases that this purchase made them the largest tractor manufacturer in S. Korea, a long-time corporate goal of theirs apparently. Since the Branson name is not very dominant in the market, I would guess their main goal was as you stated: to acquire the manufacturing assets, which apparently are considerable.

I truly hope for the sake of Branson owners that the brand continues, but if I have to lay down a 5-dollar bet right now, I'm kinda with airbiscuit on this one.

The GOOD news is, TYM is now the largest tractor manufacturer in S. Korea. Therefore, TYM parts are likely to remain widely available.

Thank you for the point of clarification. Being the largest usually means economies of scale, but, that's probably only true if one consolidates. Which means not running as 2 separate companies, with duplication of resources.

I was wondering if Kukje has capabilities that TYM is deficient in, which might explain the logic in the acquisition.

 

[GirlWhoWantsTractor]

I was wondering if Kukje has capabilities that TYM is deficient in, which might explain the logic in the acquisition.

No idea, as I only read extensively and then stick my finger in the wind. But if you can buy out your competition, obviously there is a benefit in having less competition. My understanding is that the Kukje factories were pretty amazing, so a great asset to have, and TYM paid a lot for it. What happens next???? Will be interesting to see.

 

[PapeCAT]

So looks like TYM has put a Kukje engine in their new model t264 tractor.

source: New Tractors to Look for in 2019 - YouTube

 

[Hombre]

Some of you seem to forget that Kukje wasn't just a tractor manufacturer. That was probably a small portion of the whole pie, especially Branson. They also manufactured BIG equipment. Perhaps that was the real cherry on top to them. Get with the big boys. I have no idea what else TYM manufactured so purely a WAG on my part.

 

[houska]

It's interesting to look at some of the local (Korean) articles regarding the TYM purchase of Kukje in 2016. For instance, I found this: Tongyang Moolsan Named Prime Negotiator for Kukje Machinery | The Korean Economic Daily

Some points from the article:

1. Purchase price stated as 60 billion Korean won, ~U$50 million. Financials are otherwise opaque, but you don't pay that kind of money without some profitability and/or growth.
2. Presented as a scale move in the broader "agricultural machinery" market (e.g. combines, harvesters), with TYM (#3 in Korean market, however defined) buying #4 (Kukje) in order to leapfrog LS (#2) and battle Daedong (#1) for top share of the market.
3. Purchase was a consortium with a private equity player. Many things are possible, but often this means there will be cost/efficiency as well as growth pressure. Flabby management practices will get shaken up. It rarely means a full close-down (unless it unexpectedly turns out to be the only/best option), since PE firms have little upside from that sort of deal. Basically the presence of a PE partner means someone thinks there's a lot of opportunity to do things better. That's good, but it also means that there may be pressure to cut corners or make more $ at the expense of customers, less good.
4. There's seems to have been at least some sales process, where Kukje put itself up for sale and TYM was highest/best bidder. Sometimes this can be smoke and mirrors, but at least somewhat suggestive.

 

[LouNY]

Well made it out to the Farm Show Friday, bit of a long day.
Lot of interesting equipment to look at and some nice scenery also.
Had an interesting visit with the new marketing manager for Branson aired some of my concerns,
have my doubts that I'll hear anything back. But at least I talked straight to someone past my dealer.

 

[airbiscuit]

US $50M is not a lot to pay for a manufacturing company.

 

[Texasmark]

So looks like TYM has put a Kukje engine in their new model t264 tractor.

source: New Tractors to Look for in 2019 - YouTube

My opinion based on nothing.....TYM bought Branson for the Cummins production license. My opinion based on relationship/experience with said, Branson would be miles ahead of where they were before the acquisition had they had a different management style at the top. Looks like TYM is going to be the shot in the arm they needed.

 

[bigcut]

My opinion based on nothing.....TYM bought Branson for the Cummins production license. My opinion based on relationship/experience with said, Branson would be miles ahead of where they were before the acquisition had they had a different management style at the top. Looks like TYM is going to be the shot in the arm they needed.

Tex,
I've been befuddled by the acquisition. Usually, a big part is to consolidate operations, thus, gaining economies of scale, ie., purchasing, engineering, personnel, consolidating production, etc. But, it appears that wasn't the motivation.
I think you have the best theory so far, assuming TYM couldn't just purchase a license themselves. Or, maybe the cost of the license was not much less than buying Kukje and gaining the hard assets along with the license.
In terms of the $50 M paid for Kukje, the price is usually driven by a multiple of the profits or potential profits as foreseen by the acquiring company. This against the debt that would have to be assumed. Without the financials, we can only speculate.
The other thing I struggle with is that, my perception is that Branson builds a better tractor than TYM, again, just perception. I also don't know what the other parts of Kukje exist, that may have provided an incentive or detracted from the price.

 

[Texasmark]

Tex,
I've been befuddled by the acquisition. Usually, a big part is to consolidate operations, thus, gaining economies of scale, ie., purchasing, engineering, personnel, consolidating production, etc. But, it appears that wasn't the motivation.
I think you have the best theory so far, assuming TYM couldn't just purchase a license themselves. Or, maybe the cost of the license was not much less than buying Kukje and gaining the hard assets along with the license.
In terms of the $50 M paid for Kukje, the price is usually driven by a multiple of the profits or potential profits as foreseen by the acquiring company. This against the debt that would have to be assumed. Without the financials, we can only speculate.
The other thing I struggle with is that, my perception is that Branson builds a better tractor than TYM, again, just perception. I also don't know what the other parts of Kukje exist, that may have provided an incentive or detracted from the price.

My personal opinion and actual experience. I had the 6530 and I needed a helping hand doing the kind of things you can do with a "mobile" hoist in and around tight spaces on my farm. I was pre sold on the 2400 and contacted a dealer to buy one. He was sold out and I had to wait till the middle of the next week for a truck full of new ones to arrive.....good point right off.

The dealer was a Branson-TYM dealer and when I got there had half a dozen 2400s sitting around. One was handy so I jumped on it, took it for a spin and told the sales guy to work me up a cash price. While he was gone, I saw a TYM of the same HP and amenities (4wd, loader) was sitting adjacent to it. What the heck, I "kicked the tires", hopped on and took it for a spin whereby I parked it where I found it.

The sales guy came out with my quote, super numbers, I whipped out the checkbook and went home with my Branson........no doubts period! I think TYM did their homework before they made Branson an offer.......and Branson was smart to take it.

 

[Asteral]

so from what i know the TYM- branson acquisition was strictly for the manufacturing side of Kukje Machinery, ( i know a guy who works at a branson dealership)
There won't be any mixing of brands they plan to keep both Branson & TYM separate lines of equipment, the TYM purchase was so they could get better access to parts for their own tractors, which if anyone has had a tym in the past few years knows parts sometimes can be hard to source or the wait time will be long.

that is all i know about it so far, but if anything changes i'll try to lt everyone know.

 

[Texasmark]

so from what i know the TYM- branson acquisition was strictly for the manufacturing side of Kukje Machinery, ( i know a guy who works at a branson dealership)
There won't be any mixing of brands they plan to keep both Branson & TYM separate lines of equipment, the TYM purchase was so they could get better access to parts for their own tractors, which if anyone has had a tym in the past few years knows parts sometimes can be hard to source or the wait time will be long.

that is all i know about it so far, but if anything changes i'll try to lt everyone know.

Big Tex? Bought my 2400 from you!

 

[Asteral]

Yea that is us. Hope your enjoying your tractor.
And i hope this info helps anyone who was interested in the acquisition information.

 

[Texasmark]

Yea that is us. Hope your enjoying your tractor.
And i hope this info helps anyone who was interested in the acquisition information.

You betcha. I use it all the time for all kinds of odd jobs and don't know how I did without it.

 

[kevanos]

Thatç—´ good. If you like red tractors, McCormick sold a red version back then, they have now switched to a Branson built tractor. But there was a time you could get a Kioti in white, orange and red. They just had different stickers on them. Those tractors I think are great, strong, easy to work on. Not like most new ones.

McCormick switched to Daedong/Kioti FROM LS to source compact/utility tractors, along with sister-brand Landini. They did NOT switch to Kukje/Branson.

 

[kevanos]

Kukje was basically in bankruptcy when sold to TYM. It was part of a larger conglomerate Dongkuk Steel. The Branson name has been expanding. In 2017, they began a partnership in India which is producing VST-Branson tractors. In 2018 they began supplying tractors to Ursus in Poland.

TYM has supplied tractors to Mahindra USA for years, at least since about 2007; build some compact Lamborghini tractors, RK Tractors, new utility models for Zetor since 2017 and signed a deal with Swaraj (part of Mahindra) in India. They formerly supplied Montana, Millenium, SAME, Scorpion, Allmand, Cabela's, etc...

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