Mexichem, a global leader in plastic piping and chemicals and petrochemicals, has agreed to acquire 80% stake in Netafim Ltd, from current shareholders Permira funds, Kibbutz Magal and Kibbutz Hatzerim. Completion of the acquisition is subject to regulatory approvals, and expected during Q4 -2017. As part of the deal, Mexichem will acquire all Permira fund's shares (61%), Kibbutz Magal shares (6%) and part of Kibbutz Hatzerim shares, which currently hold 33% and will retain 20% stake in the company. The total enterprise value of the transaction is US$1.895 billion.
Founded in 1965 in Kibbutz Hatzerim, Israel, Netafim pioneered the drip irrigation and has become the leading global supplier of smart irrigation solutions. Netafim's solutions are helping millions of farmers to significantly increase their yields while saving water and other agricultural inputs.
In the past few years Netafim has delivered strong financial results – with significant top-line growth and improving profitability, reaching sales of US$855 million in 2016, and invested in penetrating to new markets and strengthening its offering. The strong foundations of the company, good financial results, together with its growth potential following its investment in growth engines, have led Mexichem’s decision to invest in Netafim and strengthen its offering in the irrigation segment. According to the agreement, the parties have committed to keep Netafim's core activities in Israel, including R&D and production activities for many years.
Antonio Carrillo Rule, Mexichem CEO, commented on the acquisition: "This is a transformational acquisition that advances Mexichem’s drive into specialty products and solutions. The synergies between the companies will enable us to strengthen Netafim’s position as a leading innovator in the high growth, micro-irrigation market. Netafim has a long history of being at the
forefront of creating smart solutions for the irrigation market. This acquisition will give Mexichem access to this smart technology which eventually can be applied to create other “smart” industrial solutions.”
Ran Maidan, Netafim President and CEO, said: "We were looking for a strategic partner to Netafim that will enable us to continue develop the company and bring it to the next level. We are proud to have won the trust of a leading company such as Mexichem, and believe that together we can ensure Netafim’s growth and success” Ran added that, ”The conditions of the agreement maintain Netafim’s Israeli identity, with commitment to keep the company core activities in Israel for many years.”
Torsten Vogt, a Permira Partner and Co-Head of Industrials, added, “Netafim is an outstanding business and we are proud to have supported the company’s growth and its critical mission of conserving and protecting water resources. Over the course of our partnership with Netafim’s management, Kibbutz Hatzerim and Kibbutz Magal, the company was transformed into a best-in-class global leader, with an enhanced focus on innovation and new product development, and an expanded footprint and resources. It has been a pleasure working with the Netafim’s management team and we wish them and Mexichem continued success.”
Eli Ben-Simon, from Kibbutz Hatzerim, added: "We are happy to have Mexichem as our new partner. As a long-term investor in Netafim we are excited to continue this journey with Mexichem and we'll continue to take a significant part in Netafim’s activity for many years.”
Goldman Sachs, Centerview Partners and Bank of America Merrill Lynch acted as financial advisers to Netafim and its shareholders, and Skadden, Arps, Slate, Meagher & Flom LLP and EBN&Co acted as legal advisers.
J.P. Morgan acted as financial advisor to Mexichem in the transaction.