Deal Dies Between Makhteshim, Albaugh
7 September 2010 The only US glyphosate plant that doesn’t belong to Monsanto will remain idle for a little longer as a result of Makhteshim Agan Industries pulling out of its deal to acquire Iowa, US-based Albaugh. The companies have differing assertions about why the deal collapsed.
Through a press release, world’s largest generic pesticide company reported it discovered “a material deviation” from the data that prompted MAI to sign a letter of intent to buy Albaugh.
“We have taken the right decision given the material gaps which emerged during the due diligence process,” MAI CEO Erez Vigodman said in the press release. “We will continue to take all the necessary actions to grow MAI profitably over the coming years, while improving our cost structure and taking advantage of opportunities in our markets”.
Following this assertion, Albaugh countered through a press release by saying that MAI was trying to change the deal originally outlined in the letter of intent.
“Makhteshim Agan attempted to force major changes to the transaction at the 11th hour ,” Albaugh Chairman Dennis Albaugh countered in a statement sent to Farm Chemicals International. “While we are disappointed by Makhteshim’s decision to demand these changes, we are moving forward with our business. The fundamentals of our worldwide businesses are very strong and I believe we are poised for strong growth in 2011 and beyond”.
Analysts believe the deal could be resurrected at a different pricetag. MAI had agreed to pay $340 million in cash, $455 million in seven-year promissory notes and 59 million of its own shares worth $211 million. Albaugh’s leadership would have held the top positions at Makhteshim-Agan North America.
MAI’s share price fell shortly after the announcement, and the collapse of the deal has prompted some analysts to take a closer look at the fundamentals of the crop protection industry, its short-term profitability and its rebound amid the general economy.
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