Compass Minerals to Acquire 35% Stake in Leading Brazilian Specialty Plant Nutrition Company
Compass Minerals has signed a definitive agreement to purchase a 35 percent stake in Produquimica Industria e Comercio S.A. (Produquimica), one of Brazil’s leading manufacturers and distributors of specialty plant nutrients. The all-cash transaction valued at approximately R$450 million (US$120.7 million) is subject to customary post-closing adjustments. This agreement also includes a path to full ownership by early 2019.
“We are excited to enter one of the world’s largest and most important agricultural markets with Produquimica,” said Fran Malecha, Compass Minerals president and CEO. “Produquimica has a long history in Brazil and strong prospects for continued growth and margin expansion. Its wide range of specialty plant nutrients, application technologies, and extensive distribution network, are uniquely positioned to meet growers’ need for yield enhancement. Produquimica is a good strategic fit with our existing plant nutrition business, and this investment is an important part of our growth plan.”
Based in São Paulo, Brazil, Produquimica is expected to generate approximately R$1 billion in revenue in 2015 through two primary businesses – agricultural productivity and chemical solutions. The agricultural productivity division manufactures and distributes a broad offering of specialty plant nutrition solution-based products. These include micronutrients, controlled release fertilizers, and other specialty supplements that are used in direct soil and foliar applications, as well as through irrigation systems and for seed treatment. Produquimica also manufactures and markets specialty chemicals, primarily for the water treatment industry and use in other industrial processes in Brazil.
“We are pleased to partner with Compass Minerals in Brazil’s specialty plant nutrition and chemical market,” said Gerhard Schultz, President of Produquimica. “This investment from a strong, U.S.-based company allows us to accelerate our growth initiatives and benefit from the exchange of knowledge between our two companies.”
Compass Minerals expects to close the transaction by the end of 2015, and upon closing, Mr. Malecha and Matthew Foulston, Compass Minerals chief financial officer, will join the board of directors of Produquimica.
- Headquartered in São Paulo, Brazil with eight manufacturing facilities throughout Brazil
- Approximately 1,400 employees
- 2015 estimated net revenue = R$1 billion
- 2015 estimated EBITDA = R$180 million
To assist with funding this investment, Compass Minerals and certain of its subsidiaries have entered into a $100 million incremental term loan as part of an amendment to its existing senior secured credit facility. The incremental loan is coterminous to the existing term loan maturing in 2017 and carries an interest rate of LIBOR plus 1.75 percent.