Adecoagro to Acquire Best in Class Urea Producer

Rhea-AI Summary

Adecoagra (NYSE:AGRO) has announced a strategic acquisition of Nutrien Ltd.'s 50% stake in Profertil S.A. for approximately $600 million. The acquisition will be executed through an 80-20 partnership with Asociación de Cooperativas Argentinas (ACA).

Profertil is South America's largest granular urea producer with an annual capacity of 1.3 million metric tons of urea and 790,000 metric tons of ammonia. The company supplies about 60% of Argentina's urea consumption and has generated an average annual EBITDA of $390 million from 2020-2024. The remaining 50% stake is owned by YPF S.A., which holds a 90-day right of first refusal.

The transaction is expected to close by the end of 2025, strengthening Adecoagro's position in the agricultural sector while diversifying its operations.

Positive

• Acquisition of 50% stake in one of South America's most cost-efficient urea producers
• Target company generates substantial EBITDA of $390 million annually (2020-2024 average)
• Fully dollarized revenue stream due to export-oriented business model
• Strategic location with access to competitive gas and electricity prices
• Diversification of operations and potential reduction in results volatility
• Control of company supplying 60% of Argentina's urea consumption

Negative

• Significant capital outlay of $600 million required for the acquisition
• Transaction subject to YPF's 90-day right of first refusal, which could prevent the deal
• Completion dependent on customary closing conditions with potential delays
• Minority partnership structure with ACA (80-20) adds complexity to management

Insights

Agribusiness & Chemicals M&A Specialist

Adecoagro's $600M acquisition of Profertil stake represents strategic diversification into fertilizer production with strong EBITDA potential.

Adecoagro's acquisition of Nutrien's 50% stake in Profertil marks a significant strategic pivot for the South American agricultural producer. At $600 million, this transaction gives Adecoagro entry into the fertilizer sector through one of the region's premier assets. The partnership structure—80% Adecoagro and 20% ACA—provides both strategic alignment and risk sharing.

Profertil's financial profile is particularly compelling. With average annual EBITDA of $390 million over the past five years, and assuming consistent performance, the acquisition price represents approximately 3.1x EBITDA for the 50% stake—an attractive valuation for a best-in-class asset in this sector. The fully dollarized revenue stream offers important protection against local currency fluctuations in Argentina.

The strategic rationale centers on vertical integration and volatility reduction. As a major agricultural producer, Adecoagro is a natural consumer of fertilizers, creating potential operational synergies. More importantly, this diversification helps balance the company's exposure to agricultural commodity cycles with the somewhat countercyclical nature of fertilizer production.

Profertil's cost position appears exceptional, with the press release highlighting its status among the most cost-efficient producers globally. The Bahía Blanca location provides access to competitive natural gas (the primary input cost for urea production) and serves a regional market that remains a net importer of urea, creating structural demand advantages.

The transaction faces limited regulatory hurdles but does contain a notable contingency: YPF's 90-day right of first refusal. While this introduces some uncertainty, the complementary nature of the YPF partnership (combining energy expertise with agricultural know-how) suggests a reasonable likelihood of deal completion.

Corporate Finance Analyst

Adecoagro's acquisition of Profertil stake presents strong financial fundamentals with attractive EBITDA multiple and dollarized revenue.

The financial structure of this transaction merits careful examination. Adecoagro is purchasing Nutrien's 50% stake for $600 million in an 80/20 partnership with ACA, implying Adecoagro's direct commitment is $480 million. With Profertil generating approximately $390 million in annual EBITDA (2020-2024 average), this equates to a total enterprise value of $1.2 billion and an EV/EBITDA multiple of about 3.1x for the entire company.

This valuation appears highly favorable compared to industry benchmarks, where fertilizer producers typically trade at 5-7x EBITDA. The discount likely reflects Argentina-specific factors, but is mitigated by Profertil's fully dollarized revenue model due to its export orientation—a critical feature that provides currency stability despite operating in Argentina.

The transaction's impact on Adecoagro's balance sheet will be substantial. While financing details aren't disclosed, this represents a significant capital deployment that will alter the company's debt profile and capital allocation strategy. However, the consistent EBITDA generation from Profertil provides a strong foundation for servicing any acquisition-related debt.

The financial risk is partially buffered by the 80/20 partnership structure with ACA, which reduces Adecoagro's capital requirement while maintaining operational control. Additionally, the business fundamentals appear robust—Profertil supplies approximately 60% of Argentina's urea consumption from a competitive cost position, creating a natural economic moat.

From a portfolio perspective, this acquisition significantly diversifies Adecoagro's earnings stream. The company has historically focused on farming and sugar/ethanol production, businesses characterized by seasonal patterns and commodity price exposure. Adding fertilizer production—with its different cycle and value drivers—should reduce overall earnings volatility and potentially support a higher valuation multiple for the combined entity.

LUXEMBOURG, September 8, 2025 /PRNewswire/ -- Adecoagro S.A. (NYSE: AGRO) ("Adecoagro" or the "Company"), a leading sustainable production company in South America announces it has signed an agreement to acquire Nutrien Ltd.'s 50% interest in Profertil S.A. ("Profertil"), the largest producer of granular urea in South America. The remaining 50% stake of Profertil is owned by YPF S.A. the largest oil and gas producer of Argentina.

Adecoagro will execute this acquisition through an 80%-20% partnership with Asociación de Cooperativas Argentinas ("ACA"). The transaction is subject to customary closing conditions and is expected to be completed before the end of 2025. Under the Profertil shareholder agreement, the remaining 50% equity owner holds a 90-day right of first refusal to purchase Nutrien's equity on the same terms and conditions. The purchase price for Nutrien's shares in Profertil is expected to be approximately US$600 million.

Profertil is one of the most cost-efficient producers of urea and ammonia globally. With an annual capacity of approximately 1.3 million metric tons of urea and 790 thousand metric tons of ammonia, the company supplies approximately 60% of Argentina's urea consumption. Its state-of-the-art industrial complex in Bahía Blanca—Argentina's most important petrochemical hub—enjoys access to competitively priced natural gas and electricity. Profertil has a fully dollarized revenue business given the export nature of the product. The company generated an average annual EBITDA of approximately US$390 million over the 2020-2024 period.

"This transaction constitutes a strategic opportunity for Adecoagro" said Mariano Bosch, Co-Founder and Chief Executive Officer of Adecoagro. He added "Profertil is one of the best companies in Argentina, strategically located with access to competitive gas supply, in a region that is a net importer of urea. At Adecoagro we have always focused on being the lowest-cost producer, and Profertil shares this same philosophy. We believe this acquisition is an excellent fit for our agro-industrial platform, enabling us to continue diversifying our operations and reduce volatility in our results."

Mr. Bosch remarked: "Profertil owns modern, efficient assets and is managed by a highly experienced team with more than 20 years of proven performance. We are convinced that Adecoagro/ACA is the right partner to help Profertil continue growing and strengthening its leadership, and we see strong complementarity with YPF in this new partnership." Bosch continued: "I am also happy to have partnered with ACA, a cooperative with whom we have a long and successful relationship. Doing this project together reinforces our commitment to build sustainable, competitive, and value-adding agribusinesses in Argentina and South America."

Juan Sartori, Head of Business Initiatives of Tether and Chairman of Adecoagro's Board of Directors, commented: "We are very pleased to support Adecoagro in this important step. Profertil is a company with an outstanding track record, strong fundamentals, and a clear strategic role in Argentina and South America. We believe this transaction will create value for all stakeholders, and we are confident that Adecoagro, together with its partners, will take Profertil to the next stage of development."

Rabobank is acting as sole financial advisor to Adecoagro/ACA.

Adecoagro's management will host a conference call on September 9, 2025 at 10am EST, to discuss the transaction.

About Profertil:

Profertil is a company devoted to the production of the fertilizers needed to optimize crop yields in a sustainable manner. Equally owned by YPF and Nutrien Ltd., Profertil has its production plant located in the port of Ingeniero White, Province of Buenos Aires. There, it produces 1,320,000 tons of granulated urea annually, the main nitrogen fertilizer for the soil in the production of different oilseeds and grains. In addition, it sells other fertilizers and prepares tailor-made mixtures to provide each territory and crop with the nutrition required. It has administrative offices in Buenos Aires and logistic terminals in Bahía Blanca, Necochea, San Nicolás (Buenos Aires) and Puerto General San Martín (Santa Fe).

About Asociación de Cooperativas Argentinas (ACA):

With over a century of experience, the Argentine Cooperatives Association (ACA) stands as one of Argentina's leading operators in the commercialization of grains and oilseeds, as well as in the production and distribution of agricultural inputs. As a second-tier cooperative uniting 134 primary cooperatives, ACA's mission is to deliver comprehensive solutions while creating value in a competitive and sustainable manner. The organization is committed to ensuring transparency in the markets and preserving the distinctive principles and values of the cooperative movement.

About Adecoagro:

Adecoagro is a leading sustainable production company in South America. Adecoagro owns 210.4 thousand hectares of farmland and several industrial facilities spread across the most productive regions of Argentina, Brazil, and Uruguay, where it produces over 3.1 million tons of agricultural products and over 1 million MWh of renewable electricity.

Forward-Looking Statements

This press release contains forward-looking statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historic or current facts and often use words such as "anticipate," "estimate," "expect," "believe," "will likely result," "outlook," "project" and other words and expressions of similar meaning. Investors are cautioned not to place undue reliance on forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, those set forth in the "Risk Factors" section of the Company's Form 20-F for the fiscal year ended December 31, 2024 and subsequent filings with the SEC. The Company may not succeed in addressing these and other risks. Consequently, all forward-looking statements in this release are qualified by the factors, risks and uncertainties contained therein. No assurance can be given that the transactions described in this press release will be consummated or as to the ultimate terms of any such transactions.

For questions, please contact:

Adecoagro

Victoria Cabello - IR Officer
Email: ir@adecoagro.com

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SOURCE Adecoagro S.A.

FAQ

What is the value of Adecoagro's acquisition of Profertil stake?

Adecoagro will pay approximately $600 million for Nutrien Ltd.'s 50% stake in Profertil S.A.

What is Profertil's annual production capacity?

Profertil has an annual production capacity of 1.3 million metric tons of urea and 790,000 metric tons of ammonia.

How much of Argentina's urea consumption does Profertil supply?

Profertil supplies approximately 60% of Argentina's urea consumption.

What was Profertil's average annual EBITDA from 2020-2024?

Profertil generated an average annual EBITDA of approximately $390 million over the 2020-2024 period.

When is the AGRO acquisition of Profertil expected to close?

The transaction is expected to be completed before the end of 2025, subject to customary closing conditions.

Who are the partners in the Profertil acquisition?

Adecoagro will execute the acquisition through an 80-20 partnership with Asociación de Cooperativas Argentinas (ACA), while YPF S.A. owns the remaining 50% stake.