Agria Corporation announced that its New Zealand-listed subsidiary, PGG Wrightson Limited, has signed an agreement to purchase 50 percent of the shares of Agrocentro Uruguay with a target settlement date of Aug. 31, 2015. The transaction involves an upfront payment and a capped earn out component over the next three years based on the performance of the business.
Agrocentro Uruguay is a rural servicing company that was founded in eastern Uruguay in early 2007. It was established to provide agricultural sales, support and rural services to improve profitability for farmers. It has four different business units, consisting of retail and distribution of agricultural inputs, farming, logistics, and consulting. The business has approximately 120 staff, including 28 agronomists and veterinarians and a very proactive and skilled management team. Agrocentro Uruguay currently has eight retail branches located across Uruguay and is well positioned for further growth.
Agrocentro Uruguay is a regional pioneer in the development of advanced technology systems for meat production and forage-based seed production, and is also a market leader in sales of inputs and services. PGG Wrightson Seeds ("PGW Seeds"), a subsidiary of PGW, has been a key strategic partner and has supported Agrocentro Uruguay's business since its inception, which has since achieved impressive growth. Agrocentro Uruguay is PGW Seeds' largest customer in South America as well as its largest seed producer and is a vital seed processor for PGW Seeds.
Alan Lai, Executive Chairman of Agria and Chairman of the PGW Board commented, "It is a pleasure to announce this transaction as we continue to expand Agria's global footprint in high growth markets such as South America."
PGW's Group General Manager of Seed & Grain, John McKenzie, said, "This investment makes good strategic sense for both parties. We have had a long standing and successful relationship and we understand the business. We have shared goals for the future and this alignment of interests positions the business favorably for future growth and compliments PGW's existing South American operations very well."
PGW's Chief Executive, Mark Dewdney, commented, "The transaction presented PGW with the opportunity to consolidate the growth the business has experienced in South America while importantly also reconfiguring our operations for future growth. The transaction secures a strong position in retail distribution while also cementing a key strategic alliance. It aligns with our growth strategy for South America and also compliments the recent investment we have made in the construction of our new warehousing and logistics facilities in Montevideo."
McKenzie noted, "Following settlement, PGW and Agrocentro Uruguay will continue operating as they do today, as two separate companies. However, the businesses will work together collaboratively to consolidate their operations where commercially sensible to provide better and more efficient service to farmers. We expect that this strengthening of our partnership will in time result in improved services, logistics, product development, technology transfer and new business opportunities that will help to develop and grow the Uruguayan agricultural sector."