Drip Irrigation Pioneer Netafim Sold for $1.5B

YERUSHALAYIM -
Flock of black kites (milvus migrans) prepare for night sleep on irrigation system, in a field near Kibbutz Be’eri, in southern Israel. (Kobi Gideon/Flash90)

Netafim, an Israeli company that was at the forefront of the “green revolution” around the world, is being bought out by Mexichem, a Mexican firm that manufactures plastics and petrochemicals. The price was estimated in Israeli media as $1.5 billion. Mexichem will purchase 80 percent of the firm, purchasing all the shares (61 percent of the total shares) held by German investment firm Permira, along with all the shares (6 percent) held by Kibbutz Magal, and some of the shares owned by Kibbutz Hatzerim, which will continue to hold 80 percent of the firm. Mexichem has pledged to keep current Israeli operations going for at least 20 years.

Netafim is widely credited with inventing key technologies involved in drip irrigation, a form of irrigation that saves up to 80 percent of water usage when watering crops. Started in 1965, Netafim operates in 150 countries through 37 subsidiaries, with 13 factories throughout the world. The company has 3,000 employees, 2,000 of whom are employed in the company’s manufacturing plants.

Besides drip irrigation, Netafim provides diverse solutions – from state-of-the-art drippers to advanced automated systems – for agriculture, greenhouses, landscaping and mining, accompanied by expert agronomic, technical and operational support.

Netafim had been offered for sale in a tender process, with six companies bidding on the firm, with the highest bid by Mexichem.

In a statement, Eli Ben-Simon and Zvika Barkai of the Kibbutz Hatzerim economic committee said that “Mexichem brings with it many opportunities for synergy in business with Netafim, and will help our company continue to grow as the world leader in irrigation.

“We have developed a good working business relationship, and the leaders of Mexichem respect Israel, Netafim and Kibbutz Hatzerim and what we have accomplished here. Mexichem has promised to maintain Netafim’s Israeli ‘personality,’ as well as ensuring it remains the center of activity for Netafim’s operations for many years to come, along with a promise to ensure the future welfare of company workers. We intend to use the income from this sale to increase the kibbutz’s investment portfolio in order to ensure the financial welfare of our members,” the statement added.