Adecoagro (AGRO) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of a 50% stake in the largest granular urea producer in South America addresses a regional supply deficit, secures a critical input for agriculture, and supports diversification and reduced earnings volatility.

• Strategic location near Vaca Muerta provides access to competitively priced natural gas, aligning with a low-cost production philosophy.

• Partnership with ACA leverages a long-standing relationship to reinforce sustainable, value-adding agribusiness in South America.

• The asset complements existing operations and supports a broader food and energy platform vision.

• Complementarity with YPF is expected to strengthen Profertil's leadership in the region.

Financial terms and conditions

• Purchase price for the 50% stake is approximately $600 million, executed through an 80%/20% partnership with ACA.

• Profertil generated an average annual EBITDA of about $390 million from 2020-2024, with the deal valuing the company at roughly four times normalized EBITDA.

• Financing is secured with over $1 billion in approved credit lines, including a long-term facility from Rabobank.

• Expected net debt-to-PBR ratio will rise to about 3x post-acquisition, with a long-term target of 2x.

• The transaction is subject to customary closing conditions and YPF's 90-day right of first refusal.

Synergies and expected cost savings

• The acquisition is expected to generate new revenue streams and synergies by integrating input production with existing agricultural operations.

• The business model benefits from negative correlation between input and output prices, reducing risk.