Israeli generic crop protection products company Makhteshim Agan Industries Ltd. (TASE: MAIN) has signed a letter of intent to buy US company Albaugh Inc., which operates in the same field.
Makhteshim will buy Albaugh for $340 million in cash, $455 million in notes, and 59 million Makhteshim Agan shares, and will assume up to $280 million of Albaugh debt. The total consideration is worth some $1 billion, or about 60% of Makhteshim Agan's market cap.
Albaugh was founded in 1979 by Dennis Albaugh, who owns 100% of the company. It is based in Ankeny, Iowa, and is a leading company in the US, and in Mexico, Argentina, and Brazil. Makhteshim Agan is a unit of the IDB group, controlled by Nochi Dankner.
The acquisition is conditional upon the successful completion of due diligence, the signing of a binding agreement, and approval of both companies' boards, and it is subject to regulatory clearances in the US, Europe, and other jurisdictions. Makhteshim Agan expects the transaction to close in the fourth quarter of 2010, and to become EPS accretive, on a non-GAAP basis, one year after completion of the acquisition.
According to the companies' announcement, the combined company will profit from economies of scale, with potential operating synergies of $50 million to $60 million.
Makhteshim Agan CEO Erez Vigodman, who took up his post at the beginning of this year, said at the press conference on the release of the company's first quarter results that it would seek small acquisitions. However, the current acquisition fits with Dankner's perception that IDB has exhausted the possibilities of enhancing the company from within, and of the need to participate in the global process of consolidation in the industry.
Dankner said today, "We are very supportive of the transaction, which is consistent with IDB's strategy to expand our investments outside of Israel. This is an important development for Makhteshim Agan and for the IDB Group."
Makhteshim Agan chairman Avraham Bigger said, "This transaction strengthens our position as a world leading manufacturer and distributor of branded off-patent crop protection products. Albaugh is an excellent strategic and geographic fit, and the directors of MAI believe the acquisition represents compelling value. It complements MAI's current business with Albaugh's top-notch operations in the Americas, innovative delivery and distribution systems, and stellar customer relationships."
Published by Globes [online], Israel business news - www.globes-online.com - on June 27, 2010
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