CIECH takes over Spanish supplier of plant protection products operating on three continents
The company CIECH S. A. had signed a contract valued at EUR 33.5 mln to purchase 75% of shares in the Spanish company Proplan. In this way, the company gains control of Proplan, who has at its disposal over 120 active registrations of plant protection products and is present on three continents. The takeover is an important step towards the improvement of the position of CIECH on the world plant protection product market, and a component of the strategy of business diversification for the Group. The global plant protection product market is characterised by stable growth and high profitability.
Taking control of the Spanish company, the CIECH Group:
- gains access to new sale markets, particularly Spain, but also other countries of southern Europe, Africa, Australia as well as South America;
- takes over a portfolio of active agents and over 120 product registrations, as well as set of currently progressing registration procedures, thanks to which it will significantly broaden its offer and range of geographic activity;
- will improve its attractiveness in the search of new partners in the process of obtaining rights to new substances and the registration of products on new markets.
The company Proplan is characterised by a high revenue growth dynamic and high profitability (EBITDA margin over 20%). Potential synergies stemming from the takeover by CIECH of Proplan also span the mutual exchange of the product portfolio available on relevant domestic markets (Spain and Poland are the fourth and sixth largest plant protection product markets in Europe, respectively) and access to R&D infrastructure.
CIECH had purchased 75% of the shares in Proplan for EUR 33.5 mln from former shareholders – private persons. The Spanish company had in the year 2017. generated EUR 16m of revenue at high profitability. Over the course of the last four years, Proplan had doubled its sales value.
Proplan is a supplier of generic plant protection products. It operates according to the asset-light principle. It uses outsourcing for its production, raw material supply and logistics. The company manages a portfolio of over 120 registrations and fully coordinates the related processes. It is at the same time working on many new registrations across five continents. In the year 2018 itself, Proplan will expand its portfolio by 18 new products.
The main market of activity is Spain, but the company supplies plant protection products to France, Italy, Australia and north African countries as well. It is also planning expansion to the markets of South America.
The takeover of Proplan provides the CIECH Group with access to registered active ingredients and end products. This means large savings for CIECH – the process of registration of products on new markets is time-consuming, taking three to five years. In addition, drawing up the documentation and executing the research is related to high costs.
According to available analyses, the plant protection product market will grow stably at a pace of approx. 2% per year over the next 5-7 years, reaching a value of approx. USD 65b in the year 2025. The market of generic manufacturers will grow faster (at approx. 4% per year), and Proplan as well as CIECH are found in this group.
The conclusion of the takeover of the Spanish company is due to occur in the third quarter of 2018.