Company was part of AGCO’s grains and proteins division, sold to American Industrial Partners for $700m
07/31/2024
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Ricardo Marozzin — Foto: Divulgação
With a new owner, GSI is set to make waves in the storage and post-harvest systems market in Brazil and other South American countries. The goal is to double in size within five years, based on the 2023 revenue in the region of nearly $200 million.
Last Thursday, AGCO announced the sale of its Grains and Proteins division to the private equity firm American Industrial Partners (AIP) for $700 million. This division, which generated $1 billion in revenue globally last year, includes GSI and the brands AP, Cimbra and Tecno (automation systems), Cumberland, C-Lines, and Agromarau (dedicated to poultry and swine solutions).
Ricardo Marozzin, who recently completed 25 years at AGCO, will continue to lead GSI, tasked with growing the company and generating returns for shareholders. “Since 2003, AIP has been interested in GSI because of its desire to enter agribusiness. It’s a fund with extensive experience in the industrial sector, managing $16 billion in assets,” the executive told Valor.
AIP is a partner in 45 companies across various sectors, primarily in the U.S. and Canada. Among its partners are major pension funds and institutional investors.
“In preliminary meetings, we noticed that AIP wants to optimize the positive agricultural cycle in South America and plans to use its experience to assist GSI,” Mr. Marozzin stated. However, an investment plan has not yet been developed.
The company’s growth in the region is expected to be supported by the continuous development of automation solutions for silos and post-harvest systems, as well as comprehensive infrastructure for swine and poultry farming.
AGCO’s former division offers everything from the construction of animal housing to autonomous systems for distributing birds and feed, electronic controls, and remote operation supervision. “In serving poultry and swine farmers, we are leaders and will continue to invest in technology,” he said.
In the silo area for grain storage, GSI has not been able to replicate its international dominance in Brazil and is losing ground to Kepler Weber. “We are catching up and getting close to Kepler, which is a century-old company and a leader in the national market. A few years ago, we were the fifth player in the storage sector in the country, and now we are the second,” he stated.
Like the segment leader, GSI is betting on artificial intelligence to automate silos and processes for producers. “We can, for example, export technology for the company’s operations in Africa because the region has many similarities with South America,” he said. In the region, besides Brazil, he sees promising markets in Colombia, Peru, and Paraguay.
The deal between AGCO and AIP involves 14 factories worldwide, including two in Rio Grande do Sul. AGCO retained a storage division in China.
The transaction value implied a multiple of 8.3 times the adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of AGCO’s storage business for the 12 months ending March 31. This sale is part of AGCO’s strategic shift to focus on its core business. GSI was acquired by AGCO in 2011 for $940 million.
In a statement, AGCO CEO Eric Hansotia said, “The sale of this business allows us to optimize and enhance our focus on our premium portfolio of agricultural machinery and precision farming technology products, sustaining a long-term focus on high-growth, high-margin, and free cash flow-generating businesses.”
*Por Fernanda Pressinott — São Paulo
Source: Valor International