Why Nutrien paid BRL 1.5 billion for Casa do Adubo

Canadian Nutrien announced this week the purchase of Brazilian competitor Casa do Adubo. The value of the operation was not revealed, but sources told the Brazil Journal that the deal was closed for R$ 1.5 billion.

The acquisition catapults the multinational to the third position in the sector in Brazil, behind Lavoro and Agrogalaxy. This was the largest check ever signed in an agricultural retail M&A to date.

With the deal, Nutrien expects to have revenues of R$ 5.5 billion in Brazil, with a market share 3.5% of agricultural retail. The operation displaces 3tentos from third place, which earned R$ 5.4 billion last year, with a market share of around 3.4%.

The leadership of agricultural retail is occupied by Lavoro, which holds just over 4.5% of a market that moves R$ 160 billion in the country. Agrogalaxy has share of 4.1%.

The sale of Casa do Adubo was something that had been planned over the last 10 years. When Raphael Covre left Faria Lima and returned to Cariacica (ES) to run the family business, in 2012, after the death of his uncle, he already took with him the idea of ​​an M&A.

Fourth generation of the family at the head of Casa do Adubo, Covre was already aware of the financial market’s interest in agricultural retail and took the opportunity to organize the company’s governance. In 2018, he brought in the private equity fund Axxon as a minority shareholder and accelerated the company’s growth.

Under his management, the company went from a turnover of R$ 150 million in 2011 to the R$ 2.5 billion that should be reached this year.

“In a way, the sale anticipates the departure of Axxon which was scheduled for 2024,” Covre told the Brazil Journal. The businessman turned 39 last Friday and became the newest agribusiness billionaire.

For Nutrien, Casa do Adubo represents geographic expansion and access to small-scale producers, a segment where the company did not operate, in addition to the entry into other agricultural crops.

“This was the seventh acquisition we have made since 2019 and confirms our goal of being a national platform. We operated in five states and with the acquisition we will operate in 13,” said Carlos Britto, Nutrien’s director of retail operations for Latin America.

Nutrien was born in 2016 from the merger between Canadian companies Agrium, one of the largest agricultural retailers in North America, and Potash, a giant producer of potassium, nitrogen and phosphate. In Brazil, it inherited the operations of Agrium, which in 2012 had purchased Utilfértil. In 2018, it stepped on the accelerator by acquiring the São Paulo company Agrichem, from Ribeirão Preto.

After that came the purchase of registrations of more than 100 pesticides from BRA Agroquímica, in 2019, and from Tec Agro to Agrosema, in 2020. Last year, Bio Rural and Terra Nova were acquired. Last month the company announced the acquisition of Agro Mercantil and, now, Casa do Adubo.

Source: Brazil Journal