Mexican plastic pipes producer Mexichem announced Monday that it has reached an agreement to acquire an 80 percent stake in Israel’s iconic drip irrigation company, Netafim, from the private equity fund Permira Funds and other minority shareholders.
Kibbutz Hatzerim, Netafim’s founder, will retain the remaining 20% stake of the company’s share capital. The deal values Netafim at $1.895 billion.
Primera Funds acquired its 61.35% stake in Netafim in 2011 at a valuation of $850 million, and will receive $1.5 billion from Mexichem, giving it a return of almost 100% in just six years.
Netafim is the world’s largest irrigation company with total sales of $855 million in 2016. The company pioneered drip irrigation in the 1960s and today holds some 30% of the global market with 17 manufacturing plants, more than 4,000 employees and sales in more than 110 countries worldwide.
“Hatzerim has insured Netafim will retain its Israeli DNA and will continue to be managed and operated from Israel for many years to come, while keeping the company employees’ well-being in mind—both in Israel and around the globe,” said Eli Bensimon and Tzvika Barkai, heads of the economic management of Kibbutz Hatzerim, located in the Negev Desert.
“The value of Netafim and the terms of agreement signed demonstrate the success of Hatzerim business strategy and successful asset management, together with our partners in the last 50 years. We intend to use the sale to also leverage our other companies under the investment portfolio of Hatzerim, as well as securing the future of Hatzerim and members of Hatzerim.”
Among Hatzerim’s other holdings are Jojoba Israel, which produces Jojoba oil for the cosmetics industry and Negev Ecology, a waste management and recycling company.
Commenting on the acquisition, Ran Maidan, Netafim’s Chief Executive Officer said the deal would ensure Netafim’s growth and enable it to reach to new customers and geographies. “We also will be able to apply our R&D and technical expertise in developing end-to-end solutions to assist Mexichem in offering similar services to its industrial customer base,” Maidan said.
Mexichem CEO Antonio Carrillo Rule said the acquisition put Mexichem in a position to become “leaders in growing markets, driven by global challenges of food and water shortage, and the need for increased crop yields and higher sustainability.”
Reprinted with permission from TPS .