Mexichem SAB de CV has agreed to acquire 80% of Israel-based irrigation giant Netafim Ltd. in an all-cash deal worth US$ 1.895 billion, a transaction the Mexican plastic and chemical products manufacturer expects to complete before the end of the year.
With total sales of US$ 855 million for the year ended December 31, 2016, Netafim is the world's largest drip irrigation company.
Permira, a London-based private equity firm, owns 61% of Netafim since 2011. Mexichem completed its 80% stake in Netafim from Permira and other minority stakeholders. Kibbutz Hatzerim, founder of Netafim, will retain the remaining 20% stake of the company’s share capital.
Based in Tel Aviv, Israel, Netafim is a global leader in developing, manufacturing and distributing advanced drip and micro-irrigation solutions, with local presence in more than 30 countries; 17 manufacturing plants, one of them in Reynosa, Tamaulipas; more than 4,300 employees and sales in more than 110 countries worldwide.
Netafim’s advanced technologies and end-to-end solutions help growers across the world achieve higher and better crop yields while reducing usage of water and other inputs, such as manpower, nutrients and crop protection.
“This is a transformational acquisition that advances Mexichem’s drive into specialty products and solutions and establishes us as a leading innovator in the high growth, micro-irrigation market. At the same time, Netafim positions us to become a leading developer of solutions to address food and water shortages, and respond to the need of increase crop yields and meet higher sustainability standards for fertilization,” said Antonio Carrillo Rule, Mexichem’s Chief Executive Officer.
Netafim's smart irrigation technology can be applied to heating and cooling, water management, data communications and other sectors, he said.
"By combining our current irrigation portfolio with Netafim's business, we will create a formidable growth platform to drive synergies," he added. "With sales of almost US$1 billion (…) this new business unit will have access to the resources, sales channels, and customer base of Mexichem's global business."
With annual sales of US$ 5.4 billion, Mexichem has operations in 30 countries, employs 18,000 and has 120 manufacturing plants. It also owns two fluorite mines, 15 research and development laboratories and eight training academies.