TEL AVIV, Israel and ANKENY, Iowa -- The Makhteshim Agan Group and Albaugh Inc, a privately held manufacturer of off-patent crop protection products operating in the Americas, announced today that they have signed a letter of intent providing for the acquisition of Albaugh by Makhteshim.

Under the terms of the LOI, Albaugh will be acquired for consideration of U.S. $340 million payable in cash upon completion; US$455 million in notes; 59 million common shares of MAI (equal to approximately 12 percent of market share); and the assumption of up to US$280 million of Albaugh debt.

The boards of directors of both companies unanimously approved signing the letter of intent. The acquisition is conditional upon the successful completion of due diligence, the signing of a binding sales and purchase agreement and approval of both companies' boards, and is subject to regulatory clearances in the U.S., Europe and other relevant jurisdictions, as well as other customary conditions. MAI expects the transaction to close in the 4th quarter of 2010 and to become EPS accretive, on a non-GAAP basis, one year after completion of the acquisition.

The acquisition of Albaugh reinforces MAI's position as the global leader in the off-patent crop protection industry by significantly expanding its operations in the Americas. Founded in 1979, by Dennis Albaugh, the company is the leading off-patent player in the Americas, particularly in the U.S., Mexico, Argentina and Brazil.

In the U.S., Albaugh features a state-of-the-art glyphosate synthesis plant and best-in-class supply chain management system with a diversified formulation site at an optimal location in the heart of the U.S. grain belt. The facility has nine high-speed packing lines, six million gallons of storage capacity and a large scale, advanced supply chain and logistics system (including its own truck fleet plus tank trailers and rail link access).

In Latin America, Albaugh is a leading producer in the growing Mercosur market for 2,4-D and glyphosate and other products with a unique cost position. Its sales are driven by major herbicides for use with genetically modified organisms and sugar. Albaugh is known for building strong relationships with main distributors and possesses an expert management team with an average of 18 years of individual industry experience. In Argentina, Albaugh's subsidiary, Atanor, and MAI's existing businesses are highly complementary and, combined, should provide significant opportunities for growth and development.

As the global leader in the off-patent crop protection industry, the combined company will be well-positioned to benefit from major agricultural growth trends, such as increases in the world population, crop demand for bio-fuel use, as well as increasing meat consumption in developing countries. It will operate in areas with significant growth potential and with a portfolio of products that can leverage the most important growth trends. The combined company is also poised to profit from economies of scale, with potential operating synergies of US$50 million to US$60 million. Customers of both companies stand to benefit from access to a broader range of crop protection solutions and the efficiencies of the combined companies' supply chain.

Dennis Albaugh, current sole owner of Albaugh, will become Chairman of North America and, upon completion of the transaction, he will be a major shareholder in MAI . His U.S. management team will include Spencer Vance, currently the president of Albaugh, who will become CEO, and Rob Williams, currently CEO of Makhteshim Agan North America (MANA), who will become Deputy CEO. In Argentina, Miguel Gonzalez will continue to serve as president and CEO of Albaugh's subsidiary, Atanor. The entire Americas management team will report to Shaul Friedland, MAI's president and CEO of the Americas.

SOURCE: Makhteshim Agan Group.