Makhteshim to buy U.S. agrochem firm for $1b

The Makhteshim Agan Group will buy U.S. firm Albaugh for about $1 billion to bolster its presence in the Americas and solidify its position as the world's biggest generic agrochemical maker. Albaugh also produces generic crop protection products.

Makhteshim said yesterday it had signed a letter of intent to pay $340 million in cash, $455 million in seven-year promissory notes and 59 million of its own shares equivalent to a 12% stake worth $211 million. Both boards have already approved the deal.

The acquisition of Albaugh, a private company based in Iowa, is expected to close in the fourth quarter and be profitable within a year of closing - on a non-GAAP basis.

Albaugh's financial debt will not exceed $280 million, Makhteshim said in a statement. The deal is subject to the completion of due diligence and regulatory approvals in the United States, Europe and other countries.

Albaugh is a leading generic crop protection company in the United States, Mexico, Argentina and Brazil. Dennis Albaugh, the chairman and CEO, is currently the firm's sole owner.

Makhteshim is a subsidiary of Koor Industries, which is part of Nochi Dankner's IDB Holding. It had sales of $2.2 billion in 2009.

The combined company will have the potential to realize $50 million to $60 million in synergies, said Makhteshim.

Dankner added, "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."

Avraham Bigger, Makhteshim Agan's chairman, 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 topnotch operations in the Americas, innovative delivery and distribution systems, and stellar customer relationships."

Albaugh said, "We are confident that this combination will bring significant benefits to our customers and employees alike. Together, our two companies will provide customers with a broader, more diverse product portfolio to serve their needs, and we will continue to operate through strong partnerships with our network of distributors."