SOUTH AFRICA – South Africa based chemicals and fertiliser group Omnia Holdings has reached an agreement to sell its Oro Agri business to Rovensa, a Europe headquartered business that procures and distributes biocontrol, bio nutrition and crop protection solutions for US$146.9m (R2.4bn).
In addition to the price paid for the purchase, Omnia is entitled to the repayment from Oro Agri of aggregate amounts of US$3,071,722 and €2,897,348 which are owing by Oro Agri.
The net cash proceeds are expected to be US$152m, with Omnia paying $100m for the business in 2018.
The Price was calculated with reference to an Oro Agri enterprise value of US$165,100,000, which was reduced by the value of a 25% minority interest in Oro Agri Brazil and the net debt in Oro Agri.
“The board undertook a comprehensive review of Oro Agri as part of the group’s broader strategy and has concluded to accept Rovensa’s attractive offer and recommend that shareholders approve the transaction,” said CEO Seelan Gobalsamy.
Oro Agri is involved in the research and development, production, distribution, marketing and sales of a differentiated range of AgriBio products, many of which are patented.
Its product ranges include biological crop protection products, adjuvants, liquid foliar fertilizers and soil conditioners for all major crop types.
Omnia plans to use the proceeds from the disposal to pay down debt which stood at a net R1.88bn at end-March, and position the group with a strong financial base from which to fund selective organic expansionary capital expenditure and working capital.
“The board undertook a comprehensive review of Oro Agri as part of the group’s broader strategy and has concluded to accept Rovensa’s attractive offer and recommend that shareholders approve the transaction.”CEO Omnia Holdings – Seelan Gobalsamy
The JSE-listed company has also indicated that Rovensa has more synergies with Oro Agri, as well as capacity to fund the agribusiness’ growth plan.
Omnia has further stated that the price offered outweighs any long-term benefits from Oro Agri, which also requires much capital for it to be integrated with other company operations.
Oro Agri contributed less than 15% of Omnia’s EBITDA (excluding impairments) in FY20 and is budgeted to remain at similar levels in FY21.
Oro Agri owns and operates in-house production and R&D facilities in South Africa, Brazil, the United States and Europe.
It has a pipeline of new products and has strategic and operational plans for business development based on new registrations and expanding its sales footprint.
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