Compass Minerals has reported plans to acquire all of Produquímica Indústria e Comércio SA, São Paulo, a Brazilian manufacturer and distributor of specialty plant nutrients.
“The purchase of the remainder of Produquímica marks an important milestone for Compass Minerals in the execution of our growth strategy. This accretive acquisition gives us access to higher growth markets and geographic diversification of our earnings, while lessening our dependence on winter weather,” said Fran Malecha, Compass Minerals president and CEO. “Produquímica’s strong history of growth and product development in Brazil provides Compass Minerals an excellent platform for expansion in one of the world’s most important agriculture markets. We look forward to the opportunities that will come from Produquímica joining Compass Minerals.”
Compass Minerals purchased 35 percent of Produquímica in December 2015. The expected price for the remaining 65 percent of equity is approximately $310-$330 million, is based on Produquímica’s expected 2016 performance, and will be subject to customary, post-closing adjustments. In addition, Compass Minerals will assume approximately $150 million in U.S. dollar equivalent long-term debt, most of which will be retired during the fourth quarter. The acquisition includes approximately $150 million of net working capital.
Compass Minerals expects the transaction to add $0.12-$0.15 to full-year 2016 diluted earnings per share.
Produquímica, generated approximately R$1.2 billion in net revenue and R$198 million in EBITDA as of the 12 months ending June 30, 2016. It operates two primary businesses – agricultural productivity and chemical solutions. The agricultural productivity division manufactures and distributes 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. Produquímica also manufactures and markets specialty chemicals, primarily for the water treatment industry and for use in other industrial processes in Brazil. It has 1,400 employees.
Compass Minerals expects to close the transaction in early October 2016 subject to regulatory approval and to fund the acquisition with new debt. This transaction was enabled by an amendment to the prior agreement between Compass Minerals and key shareholders of Produquímica.