Jan. 15, 2019
American Vanguard Corporation acquires two affiliated Brazilian limited liability companies — Agrovant and Defensive. The combined business primarily focuses on the market segments of fruits and vegetables. The business has become a fast-growing supplier of micronutrients and crop protection products, with yearly sales of around $20 million. However, the financial terms of the deal have been kept under wraps.
Founded in 2000, Agrovant and Defensive distribution franchise, located in the province of Sao Paulo, Brazil, consists of 35 full-time employees with a group of experienced commissioned sales agents. Management has been successful at driving significant earnings and revenue growth, while having excellent control of credit risk, debt financing and working capital.
The acquisition helps the company expands access to the Brazilian agricultural sector, which ranks, with approximately $9 billion, as the world’s largest crop protection market. The deal provides American Vanguard a strong platform to market and distribute AMVAC products as well as offer introduction of SIMPAS (Smart Integrated Multi-product Prescriptive Application System) planting systems in South America. Additionally, the company will penetrate the extensive Brazilian soybean market apart from Agrovant/Defensive’s strong position in the fruits and vegetables market. The company expects to increase its involvement in the cotton, corn and sugar cane segments as well as the fast-growing micronutrients market.
Notably, by the combination of Brazilian distribution franchise with AMVAC’s portfolio of products and equipment, American Vanguard has an active participation in the Brazilian agricultural market.
Shares of American Vanguard have lost 22.3% over the past six months compared with the 6.6% decline of the industry it belongs to.
During the third-quarter 2018 earnings call, the company stated that it sees strong sales from its soil fumigants and Equus fungicide as well as its domestic non-crop and Central America distribution businesses on a year-over-year basis in the fourth quarter.
The company envisions sustained demand for products in fruits and vegetables as well as pre-season purchasing demand for corn products going into the 2019 spring planting season.