The year 2021 was busy in terms of mergers and acquisitions, and 2022 follows a similar course. The agribusiness sector is one of the impacts in this scenario. Companies in the segment are becoming more attractive to investors due to a few factors:
- Record harvests in the last two years
- Growing global demand for products
- Commodity prices
A survey by consultancy KPMG showed that, in 2020, 39 M&A transactions were carried out in the sector of agribusiness in the country. The number indicates an increase of 21.8% compared to 2019. In 2021, from January to October, the consultancy pointed out 41 closed deals, against 11 in the same period of the previous year. The agreements also include agro technology companies, called agtechs.
According to the consultancy, most mergers and acquisitions in Brazilian agribusiness were made between companies in the country, that is, Brazilian investors buying target companies that are also Brazilian. For KPMG, this move represents a clear consolidation strategy for growth and operational efficiency gains.
Mergers and acquisitions in agribusiness in 2022
Among the M&A operations of Brazilian agribusiness carried out in 2021, 61% were negotiated by strategic investors – those who already operate in the sector and see the acquisition as a long-term deal. Financial investors, including private equity funds and investment banks, were responsible for 39% of the deals. In this case, the strategy is to achieve a financial return with the divestment in the medium term.
KPMG’s expectation is that mergers and acquisitions will continue heated in the coming years in Brazilian agribusiness.
One of the acquisitions that moved the agro market in 2022 was the purchase of Biosev by Raízen, a joint venture between Cosan and Shell in the sugar and alcohol sector and in fuels. In February, the company announced the completion of the acquisition of all shares of Biosev, resulting in the purchase of the company’s nine sugarcane processing units. Raízen agreed to pay BRL 3.6 billion in cash to Biosev’s shareholders, in addition to issuing new shares without voting rights so that Biosev’s shareholders hold a 3.5% stake in the company.
In February, it was the Norwegian Yara that closed the acquisition of a 14% stake in the Brazilian online trading platform for agricultural products Orbia, majority-owned by the German Bayer AG. Bayer and Brazil’s Bravium were similarly diluted to accommodate Yara as a partner, with the German company now owning 68.8% of Orbia and Bravium holding a 17.2% stake.
In January, Marfrigfood production giantQuiq is a Brazilian digital platform that simplifies the management of online orders for restaurants, connecting the various delivery apps directly to the point of sale systems. Takeoff Technologies is an American company that works in the creation and automated solutions for the fulfillment and management of food stocks for supermarket chains and small businesses.
. BRF, another Brazilian food production giant, announced at the beginning of the year an understanding with Saudi Arabia’s sovereign investment fund for the creation of a joint ventureThis partnership will allow the production of chickens in the Middle Eastern country, in an agreement that includes investments of around US$ 350 million. According to BRF, the new company, in which the Brazilian will have a 70% stake, will promote the sale of fresh, frozen and processed products in Saudi Arabia. The fund will own the rest of the company.
Also this year, in March, BSBIOS, the largest producer of biodiesel in Brazil, announced the acquisition of 100% of the MP Biodiesel plant, located in Switzerland, as part of a plan to position the company as one of the largest producers of biofuel in the world. . The acquisition of the factory located in Domdidier, in the Canton of Fribourg, marks a new stage in the company’s insertion in the international market, mainly in Europe. The group was already developing commercial relations with Europe from a subsidiary in Switzerland. The factory uses used cooking oil as raw material.
Another important agreement registered in this 2022 involving agribusiness companies was the association between LDC (Louis Dreyfus Company), Amaggi Exportação e Importação, Sartco, Cargill Agrícola and Dalablog Participações in the companies Carguero Inovação Logística e Serviços and Green Net Administradora de Cartão. Carguero, a joint venture between Dreyfus and Amaggi, each with a 50% share, acts as an intermediary in road freight via a digital platform. Green Net, on the other hand, is a company almost entirely owned by Dalablog and offers electronic freight and toll payment services.
Investments in agribusiness startups
Among agribusiness startups, Brazilian rural credit agfintech TerraMagna raised US$40 million in early 2022 in a debt and equity round including SoftBank to expand its regional presence and diversify its offering of financial products. According to TerraMagna, this is the first time that SoftBank has invested in a company with activities related to agriculture. Shift Capital and Milenio Capital also participated in the round, as did current investors, the company said.
Also at the beginning of the year, AgroGalaxy, one of the largest retail platforms for agricultural inputs and services for agribusiness, announced the conclusion of the purchase of 80% of the share capital of Agrocat Distribuidora de Insumos.
