Mexichem boosts irrigation exposure with Netafim buy

Published August 10th, 2017

Mexican pipe manufacturer Mexichem has diversified its footprint in the specialty applications sector by agreeing to acquire 80% of Israeli smart irrigation specialist Netafim.

The deal values the business at $1.895 billion – approximately 14.8x trailing twelve-month EBITDA – and will mark the exit of private equity house Permira, which has held a 61% stake in Netafim since 2011.

Although the headline numbers might suggest that Permira made little if any money on the deal (its website lists the value of the 2011 transaction as €800 million, which in dollar terms looks to be flat to where its stake in the business is being sold today), a source close to the process confirmed that the investment is expected to yield a gross multiple of approximately 2.5x, subject to final balance sheet and FX movements.

Mexichem entered the irrigation sector through a series of acquisitions in Latin America conducted in 2008 and 2009.