Spanish Firm MAT Holding to Acquire Israel's Netafim

Mexican company Orbia is reportedly nearing the sale of its Israeli drip irrigation firm Netafim to Spain's MAT Holding by the end of the year. Negotiations are in advanced stages, with plans to sell 80% of Netafim's shares for an enterprise value of $1.2 billion. After accounting for approximately $400 million in debt, Netafim's equity value in the deal is estimated at $800 million.

As part of the transaction, Kibbutz Hatzerim will acquire a 10% stake in Netafim for $80 million. The Spanish company MAT Holding, along with an investment fund, will purchase the remaining 70% of the shares. MAT Holding, which has annual sales of 429 million euros, requires financial backing for the acquisition, with its share amounting to $560 million. To secure this, MAT Holding is in discussions with the European investment fund Tikehau Capital, which manages tens of billions of euros and is expected to invest hundreds of millions in MAT Holding. Tikehau Capital will hold approximately 35% of Netafim's shares post-acquisition, similar to MAT Holding's stake, while Kibbutz Hatzerim will hold 30%.

Netafim, the world's largest drip irrigation systems manufacturer with annual revenues of about $1.2 billion, was previously acquired by Orbia in August 2017 from the private equity fund Permira for $1.16 billion. Orbia's management of Netafim has been criticized for reducing R&D investments, impacting revenues and profits. Netafim constituted only 15% of Orbia's overall business, leading to less managerial attention.

Previous attempts to sell Netafim included an Israeli fund, Fortissimo, and a deal with a Chinese billionaire, Hao Yu Wang, and the HOPU investment fund. The deal with Wang stalled due to U.S. regulatory concerns regarding Netafim's significant sales in the U.S. and the complex U.S.-China relations. MAT Holding, a family-owned industrial group based in Barcelona with expertise in water solutions and crop protection, has prior business dealings in Israel, including the 2014 acquisition of Magaf Dorot from Kibbutz Dorot.

Netafim, under the management of Gabi Myodovnik, operates in 110 countries with 33 subsidiaries, 19 production plants, and approximately 5,000 employees. The company faces increasing competition from Rivulis, Jain, Azud, and Chinese manufacturers. The synergy with MAT Holding is expected to boost sales in Europe, Asia, the U.S., and particularly South America.