#Argentina #Buenos Aires #Adecoagro #Nutrien #Profertil

Adecoagro's Strategic Acquisition of Profertil

Adecoagro S.A., a well-known sustainable production company in South America, officially announced its agreement to acquire Nutrien Ltd.'s 50% stake in Profertil S.A., the largest granular urea producer in South America. This acquisition positions Adecoagro not only to broaden its portfolio but also to enhance its operational efficiency in the agricultural sector.

Details of the Acquisition

The acquisition is structured through an 80% to 20% partnership with Asociación de Cooperativas Argentinas (ACA). The completion of this deal is subject to customary closing conditions and is anticipated to finalize before the close of 2025. It's crucial to note that under Profertil's shareholder agreement, the remaining equity owner, YPF S.A., retains a 90-day right of first refusal to acquire Nutrien's shares on similar terms if they choose to do so. The estimated price for Nutrien's shares in Profertil is around $600 million.

Interestingly, Profertil is recognized globally for its cost efficiency in producing urea and ammonia, boasting an impressive annual capacity of 1.3 million metric tons of urea and 790 thousand metric tons of ammonia. This facility is vital for Argentina as it meets approximately 60% of the country's urea consumption, which is primarily utilized in agricultural applications.

Strategic Importance

Mariano Bosch, the Co-Founder and CEO of Adecoagro, emphasized that this transaction represents a strategic opportunity for the company. He stated, "Profertil is one of the best companies in Argentina, strategically positioned with access to competitive gas supply. This aligns perfectly with our philosophy of being low-cost producers. We are confident that this acquisition complements our agro-industrial platform effectively."

The urea produced by Profertil plays a significant role in enhancing crop yields, and its industrial complex in Bahía Blanca is located within Argentina's primary petrochemical hub, ensuring access to competitively priced natural gas and electricity essential for production.

Efficient Operations

Beyond its production capabilities, Profertil has demonstrated robust financial performance, averaging an annual EBITDA of approximately $390 million between 2020 and 2024. This financial endurance underscores the strategic value Adecoagro sees in the acquisition, reinforcing their mission to diversify operations and mitigate financial volatility.

Future Prospects

Adecoagro's management team is committed to ensuring that Profertil continues its path of growth and enhances its leadership in the market. The partnership with YPF, coupled with the long-standing relationship with ACA, paves the way for extensive collaboration in the agribusiness sector.

Juan Sartori, the Chairman of Adecoagro's Board of Directors, expressed his contentment over supporting Adecoagro in this initiative. He added that Profertil's illustrious history and strong fundamentals make it an essential player in the Argentine and South American agriculture landscape.

Conclusion

This strategic acquisition speaks volumes about Adecoagro's vision to foster sustainable agricultural practices while ensuring profitability and growth in Argentina's agribusiness sector. It highlights a significant step forward in the quest for innovative and environmentally friendly agricultural solutions, setting the stage for future developments while serving the needs of local farmers and producers effectively.

In summary, Adecoagro's move to acquire Profertil is not just about expanding its business, but about cementing its role as a leader in the sustainable agriculture industry, supporting both regional growth and environmental wellbeing.