NEP sells Actagro to Nutrien in $340m deal

Partner Todd Solow says educating growers and retailers about the potential return on investment from the company’s plant health products was key to the investment’s success.

Norwest Equity Partners has sold crop nutrition product supplier Actagro to Nurtien, a Canadian fertilizer company, for $340 million.

Finalized earlier this month, the deal includes Actagro’s production facilities in Arkansas and California, as well as a research and development center in California.

Actagro was founded in 1980 and is based in Fresno, California. The company offers 30 environmentally sustainable soil and plant health products derived from plant material, including offerings designed to improve nutrient availability, restrict depletion rates of soil nutrients and support organic production.

Minneapolis, Minnesota-headquartered NEP used capital from its Norwest Equity Partners IX fund, which closed on $1.2 billion in 2008, to make what the firm described as a “significant” investment of an undisclosed size into Actagro in December 2011.

Agriculture is one of seven sectors of focus for NEP. Ag-related investments in its portfolio include produce distributor Bix Produce and food product distributor Old Hickory Smokehouse.

Partner Todd Solow said it was NEP’s previous investment in Becker Underwood, a supplier of non-pesticide specialty chemical and biological products that was sold to BASF for $1.02 billion in 2012, that introduced the firm to Actagro.

Solow told Agri Investor the firm had lengthy discussions with Actagro about a potential acquisition by Becker Underwood in 2006 that ultimately did not result in a deal. Actagro received private equity investment from lower mid-market-focused RedCloud Capital in 2008, and NEP was among the firms contacted when RedCloud was looking for an exit, Solow said.

“We had a history with the business, had seen the growth from 2006 and went after it again,” he added.

As owners of Actagro, Solow said, NEP replaced the company’s recently retired chief executive with Dow Chemical veteran Monty Bayer and took steps to encourage producers to think of their potential return on investment into the company’s plant health products.

“You need to spend the money upfront and you will see the yields later: that’s not an easy sell with farmers,” Solow said. “We spent time testing products with growers, with retailers and different organizations – educational organizations and universities – to demonstrate the yield-enhancing characteristics of our products, and that just takes time.”

The firm also moved to increase spending on research and development of new products, some of which have been released over just the past two years.

“That new product pipeline was part of the reason why Nutrien wanted to acquire the company,” Solow said.

In addition to its fertilizer business, Solow said, Nutrien is also the largest ag input retailer in the United States and its retail division had already been Actagro’s biggest customer.

Solow said NEP did not market the company broadly, but there had been expressions of interest from strategic and financial investors during its ownership.