Compass Minerals (CMP) Announces Completion of Produquímica Acquisition
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Compass Minerals (NYSE: CMP) announced it has completed the purchase of all remaining interest in Produquímica Indústria e Comércio S.A. (Produquímica), one of Brazil’s leading manufacturers and distributors of specialty plant nutrients. As previously disclosed, the acquisition is expected to add $0.12 to $0.15 to earnings per share in 2016, excluding any purchase accounting adjustments.
“With this acquisition complete, Compass Minerals has delivered on a key component of our growth strategy. We have expanded the geographic scope of our operations into one of the world’s most important agriculture markets, broadened our portfolio of specialty plant nutrition products, and reduced our dependency on winter weather,” said Fran Malecha, Compass Minerals president and CEO. “I am delighted to officially welcome all of the employees and associates of Produquímica to Compass Minerals and look forward to the growth we can achieve as one company.”
Compass Minerals purchased 35 percent of Produquímica in December 2015. Total consideration for the remainder of Produquímica was approximately $465 million (based on a Brazilian Real-to-US$ exchange rate of R$3.25/US$1.00). This includes the purchase of equity valued at $328 million based on Produquímica’s estimated 2016 earnings, subject to customary, post-closing adjustments, and the assumption of approximately $137 million of net debt. The company expects to retire a portion of Produquímica’s debt during the fourth quarter of 2016.
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 used in direct soil and foliar applications, as well as through irrigation systems and for seed treatment. Produquímica also manufactures and markets specialty chemicals, primarily for the water treatment industry and for use in other industrial processes in Brazil. Both businesses are supported by robust research and development capabilities and a strong technical sales force, which have helped fuel Produquímica’s revenue and earnings growth. For the period from 2011 to 2015, Produquímica’s net sales and EBITDA* grew at 16 percent and 19 percent compounded annual growth rates, respectively.
Additional details regarding the transaction can be found in a Form 8-K the company filed today with the U.S. Securities and Exchange Commission.
*Earnings before interest, taxes, depreciation and amortization.
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