Compass Minerals (NYSE: CMP) today announced an agreement to purchase all outstanding interest in Produquímica Indústria e Comércio S.A. (Produquímica), one of Brazil’s leading manufacturers and distributors 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 million to $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 to $0.15 to full-year 2016 diluted earnings per share.
Based in São Paulo, Brazil, 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. Produquímica operates 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. Many of these products are developed through Produquímica’s robust research and development capabilities. Produquímica also manufactures and markets specialty chemicals, primarily for the water treatment industry and for use in other industrial processes in Brazil.
“All of us at Produquímica are excited about the opportunities that our customers and employees will have as part of Compass Minerals,” said Gerhard Schultz, President of Produquímica. “We look forward to growing with Compass Minerals in Brazil’s specialty plant nutrition market and beyond.”
- Headquartered in São Paulo, Brazil with nine manufacturing facilities throughout Brazil
- Approximately 1,400 employees
- 2015 net revenue = R$1.1 billion
- 2015 EBITDA* = R$184 million
Compass Minerals expects to close the transaction in early October 2016 subject to regulatory approval and to fund the acquisition with new debt. This transaction was enabled by an amendment to the prior agreement between Compass Minerals and key shareholders of Produquímica. Details of the amendment can be found in a Form 8-K that the company filed today with the U.S. Securities and Exchange Commission.
*Based Brazilian Real-to-US$ exchange rate of R$3.18/US$1.00.
*Earnings before interest, taxes, depreciation and amortization, adjusted for special items.