SABIC Agri-Nutrients Co., Riyadh, has signed a binding agreement to acquire 49 percent of the share capital of Dubai-based agri-nutrient blender and distributor ETG Inputs Holdco Ltd., the Saudi company said in a Jan. 24 filing to Saudi’s Tadawul.
SABIC Agri-Nutrients Co. has agreed to pay an enterprise value of $320 million (equivalent to SAR1.2 billion), based on cash free, debt free, and changes in the working capital adjustment that will determined at transaction completion.
The deal was agreed with ETG Inputs Holdco’s parent, ETC Group, also based in Dubai.
ETG owns more than 350 distribution centers across sub-Saharan Africa, and blends and distributes specialized fertilizers and agro chemicals. The company, according to ETC Group, has positioned itself to cater to commercial and smallholder farmer requirements across the African continent, including the most rural areas where opportunity is scarce.
SABIC Agri-Nutrients said the stake acquisition is part of its strategy direction to integrate the value chain to include blending and distribution of agri-nutrients in global markets and move closer to farmers and end-customers. This, it said, would “expand and take advantage” of growth opportunities to keep up with expected developments and position SABIC Agri-Nutrients as a leading player in the global agri-nutrients industry.
ETC Group said the introduction of the Saudi company as a 49 percent stakeholder will strengthen ETG’s efforts to “further penetrate the agricultural inputs markets globally, extending beyond Africa.”
The transaction with ETG Inputs Holdco remains subject to regulatory approvals and other conditions, and will be financed by SABIC Agri-Nutrients’ own resources in addition to bank facilities.
The Saudi company expects the financial impact of the transaction to occur during the second-half of its fiscal year ended Dec. 31, 2022.
SABIC Agri-Nutrients owns SABIC’s 50 percent stake in National Chemical Fertilizer Co. (Ibn Al-Baytar) and in Al-Jubail Fertilizer Co. (Al Bayroni), and its 33.33 percent holding in Bahrain-based nitrogen fertilizer producer Gulf Petrochemicals Industries Co. (GPIC). Its product portfolio includes ammonia, urea, DAP, and specialized fertilizer.
Saudi Basic Industries Corp. (SABIC), in turn, owns a 50.1 percent stake in SABIC Agri-Nutrients Co.
ETG acquired South Africa’s Farmisco (Pty) Ltd., trading as Kynoch Fertilizer, a leading plant nutrient supplier, in 2014, and in 2019 acquired liquid and granular fertilizer blender and supplier Profert Holdings (Pty) Ltd., whose core business is Profert Fertilizer (GM April 5, 2019). ETG’s brands also include Falcon and Zambian Fertilizers.
South Africa’s Public Investment Corp. (PIC) acquired a 49 percent equity stake in ETG in 2017 (GM Dec. 22, 2017), but it could not be confirmed by Green Markets’ press time if PIC has since divested this stake or reduced the holding.