Mexichem to Acquire Netafim – World Leader in Smart Irrigation

TLALNEPANTLA DE BAZ, Mexico–(BUSINESS WIRE)–Mexichem, S.A.B. de C.V. (BMV:MEXCHEM*) (“The Company” or “Mexichem”)
announced today that it has reached a definitive agreement to acquire an
80% stake in Netafim, Ltd. (“Netafim”), an Israeli private company, from
a company backed by the Permira Funds and other minority shareholders.
Kibbutz Hatzerim, the founder, will retain the remaining 20% stake of
Netafim’s share capital. The total enterprise value of the transaction
is US$1.895 billion.

Netafim is the world’s largest irrigation company. In the past few years
it has achieved strong financial performance, with top line growth and
improving profitability, reaching total sales of US$855 million for the
year ended December 31, 2016. Mexichem will fund the acquisition with a
combination of cash and debt.

“This is a transformational acquisition that advances Mexichem’s drive
into specialty products and solutions and establishes us as a leading
innovator in the high growth, micro-irrigation market. At the same time,
Netafim positions us to become a leading developer of solutions to
address food and water shortages, and respond to the need of increase
crop yields and meet higher sustainability standards for fertilization.
Netafim has a long history of being at the forefront of creating smart
solutions for the irrigation market. This acquisition will give Mexichem
access to this smart technology which can be applied to heating and
cooling, water management, Datacom, and other sectors, providing a
platform from which to create smart industrial solutions around our
existing product lines that serve the infrastructure, housing and
Datacom markets,” said Antonio Carrillo Rule, Mexichem’s Chief Executive
Officer.

Based in Tel Aviv, Israel, Netafim is a global leader in developing,
manufacturing and distributing advanced drip and micro-irrigation
solutions, with local presence in more than 30 countries, 17
manufacturing plants, more than 4,300 employees and sales in more than
110 countries worldwide. Netafim’s advanced technologies and end-to-end
solutions help growers across the world achieve higher and better crop
yields while reducing usage of water and other inputs, such as manpower,
nutrients and crop protection.

“By combining our current irrigation portfolio with Netafim’s business,
we will create a formidable growth platform to drive synergies. With
sales of almost $1 billion in the aggregate, this new business unit will
have access to the resources, sales channels, and customer base of
Mexichem’s global business. Additionally, we expect to leverage
Netafim’s resources and expertise to create innovative new solutions
across Mexichem’s specialty products. We also see substantial operating
efficiencies over time in raw material procurement, logistics, and the
sharing of production processes and technology know-how,” continued Mr
Carrillo.

Commenting on the acquisition, Ran Maidan, Netafim’s Chief Executive
Officer noted, “We are proud to have won the trust of a leading company
such as Mexichem, and believe that together we will have an improved
cost position and broader portfolio to support continued profitable
growth and to extend our reach to new customers and geographies. We also
will be able to apply our R&D and technical expertise in developing
end-to-end innovative solutions that Mexichem can offer to its
industrial customer base.”

Concluding, Mr. Carrillo said, “This acquisition strengthens Mexichem’s
investment thesis by significantly broadening our portfolio of specialty
products, diversifying and expanding our end-markets and broadening our
geographic footprint.”

Torsten Vogt, a Permira Partner and Co-Head of Industrials,
commented, “Netafim is an outstanding business and we are proud to have
supported the company’s growth and its critical mission of conserving
and protecting water resources. Over the course of our partnership with
Netafim’s management, Kibbutz Hatzerim and Kibbutz Magal, the company
was transformed into a best-in-class global leader, with an enhanced
focus on innovation and new product development, and an expanded
footprint and resources. It has been a pleasure working with the Netafim
team and we wish them continued success as part of Mexichem.”

The transaction is subject to approval by Mexichem’s shareholders
meeting and regulatory approvals and is expected to close during the
fourth quarter of 2017. Once the transaction is completed, Mexichem will
consolidate Netafim under its Fluent Business Group for accounting
purposes. Netafim will continue to operate under its current management
and with its existing brand portfolio.

Mexichem will host a conference call to discuss the transaction on
Monday August 7th, 2017 at 7:30 a.m. Mexico City / 8:30 a.m. NY. To
access the call, please dial 001-855-817-7630 (Mexico), or
1-888-349-0106 (United States) or 1-412-902-0131 (International). All
callers should dial in a minimum of 15 minutes prior to the start time
and ask for the Mexichem conference call.

The call will also be available through live webcast.
A replay of the call will be available approximately two hours after the
end of the call. The replay can be accessed via Mexichem’s website at www.mexichem.com.

J.P. Morgan acted as financial advisor to Mexichem in the transaction.

About Netafim

Netafim is the global leader in smart irrigation solutions for a
sustainable future. With 29 subsidiaries, 17 manufacturing plants and
over 4,300 employees worldwide, Netafim delivers innovative solutions to
growers of all sizes, from smallholders to large-scale agricultural
producers, in over 110 countries. Founded in 1965, Netafim pioneered the
drip revolution, creating a paradigm shift toward low-flow irrigation.
Today, Netafim provides the most advanced irrigation solutions for
agriculture, landscape and mining. Specializing in end-to-end solutions
from the water source to the root zone, Netafim delivers turnkey
irrigation projects – Including bulk water supply, advanced irrigation
systems and digital crop management and automation systems, supported by
engineering, agronomic, technical and financing services. Netafim’s
leading solutions enable efficient irrigation and are helping the world
to “Grow More With Less.”

About Kibbutz Hatzerim

Located in the Negev desert in Israel, Kibbutz Hatzerim was founded in
1946. It co-founded Netafim in 1965, and introduced drip irrigation
technology commercially to the agricultural community. One of the first
agricultural settlements to move from traditional farming to corporate
entrepreneurship, Hatzerim has supported continuous innovation in
irrigation for over 50 years. It has provided Netafim a rich legacy of
down-to-earth rural values combined with cutting-edge agronomic and
technological expertise to lead the way in drip and micro irrigation
solutions that help farmers around the world.

About Permira

Permira is a global investment firm that finds and backs successful
businesses with growth ambition. Founded in 1985, the firm advises funds
with a total committed capital of approximately €32 billion (US$35
billion). The Permira funds make long-term investments in companies with
the ambition of transforming their performance and driving sustainable
growth. In the past 32 years, the Permira funds have made over 200
private equity investments in five key sectors: Consumer, Financial
Services, Healthcare, Industrials and Technology. Current and past
industrial investments for the Permira funds include chemical
manufacturer CABB, micro-irrigation specialist Netafim, containment
solutions business Bakercorp, and leading fulfillment solutions provider
Intelligrated. Permira employs over 200 people in 14 offices across
North America, Europe and Asia.

ABOUT MEXICHEM

Mexichem is a global leader in plastic piping, one of the most
cost-efficient PVC producer and one of the world’s largest chemical and
petrochemical companies. Mexichem contributes to global development by
delivering an extended portfolio of products to high growth sectors such
as infrastructure, housing, Datacom, water management, among others.
With operations in over 30 countries, Mexichem’s global footprint
includes more than 18,000 employees, 120 plants, two fluorite mines, 15
R&D laboratories and eight training academies. Mexichem has annual
revenues of US$5.4 billion, it has over 50 years of history and more
than 30 years trading on the Mexican Stock Exchange. The company is
member of the Mexican Stock Exchange Sustainability Index and the
sustainability emerging markets index FTSE4Good.

Forward-looking Statements

In addition to historical information, this press release contains
“forward-looking” statements that reflect management’s expectations for
the future. The words “anticipate,” “believe,” “expect,” “hope,” “have
the intention of,” “might,” “plan,” “should” and similar expressions
generally indicate comments on expectations. The final results may be
materially different from current expectations due to several factors,
which include, but are not limited to, global and local changes in
politics, the economy, business, competition, market and regulatory
factors, cyclical trends in relevant sectors; as well as other factors
that are highlighted under the title “Risk Factors” on the annual report
submitted by Mexichem to the Mexican National Banking and Securities
Commission (CNBV). The forward-looking statements included herein
represent Mexichem’s views as of the date of this press release.
Mexichem undertakes no obligation to revise or update publicly any
forward-looking statement for any reason unless required by law.”

Mexichem has implemented a new Code of Ethics that rules its
relationships with its employees, clients, suppliers and general groups.
Mexichem’s Code of Ethics is available for consulting in the following
link: http://www.mexichem.com/Codigo_de_etica.html.
Additionally, Mexichem Audit Committee established a mechanism
of contact, which allows that any person that knows the unfulfilment of
operational and accounting records guidelines and lack of internal
controls of the Code of Ethics, from the Company itself or from the
subsidiaries that this controls, file a complaint which is anonymously
guaranteed. The whistleblower program is facilitated by a third party.
The telephone number in Mexico is 01-800-062-12-03. The website is http://www.ethic-line.com/mexichem
and contact e-mail is [email protected].
Mexichem’s Audit Committee will be notified of all complaints for
immediate investigation.

Contacts

Investor Relations:
Mexichem
Marcela Muñoz Moheno, +
(52) 55.5366.4000 x4206
[email protected]
www.mexichem.com