AgTech Corporate Mergers & Acquisitions

Acquisition of Borealis NITRO by AGROFERT Approved

Acquisition of AgTech

The European Commission has unconditionally approved the acquisition of Borealis NITRO by AGROFERT Group under the EU Merger Regulation. The Commission concluded that the transaction would not create competition concerns in the EEA. Borealis AG and AGROFERT both operate in the agricultural and chemical sectors, and they are involved in producing and selling nitrogen fertilizers, AdBlue liquid, and other technical nitrogen products. However, the Commission found that the merged entity would continue facing several strong competitors and only have a moderate combined market share. Therefore, the transaction would not affect competition in the EEA.

The Commission also concluded that the transaction would not raise concerns about the distribution of nitrogen fertilizers in Czechia and Slovakia. The merged entity would still face intense competition from competitors in these markets, and numerous suppliers of nitrogen fertilizers would remain active in the EEA. Moreover, the parties are not significant customers of third-party fertilizers, and there are enough competing distributors that will continue to operate in Czechia and Slovakia. Therefore, the Commission cleared the case unconditionally, stating that the transaction would not affect competition in the EEA.

Trends In Mergers & Acquisitions According To Morgan Stanley

Mergers and acquisitions activity (M&A) is expected to remain subdued at the beginning of 2023, in line with the trend seen in the latter half of 2022. However, Tom Miles and Brian Healy, Co-Heads of Americas M&A at Morgan Stanley, anticipate accelerating deal-making from the second half of 2023 and beyond. Several factors are likely to drive this acceleration in activity, including well-capitalized companies looking to make acquisitions in their core businesses, financial sponsors deploying record amounts of capital in acquisitions, uneven performance among companies leading to shareholder activism, and a resurgence of cross-border M&A.

The first half of 2022 saw a continuation of the recording environment from 2021, with solid deal activity, including several “mega deals” valued at over $10 billion. However, deal activity slowed significantly in the second half of 2022 due to several macroeconomic factors, including volatile capital markets, rapidly rising interest rates, and inflationary pressures. Corporations focused more on internal operations rather than making acquisitions, and potential sellers faced declining valuations, leading to reluctance to transact at lower prices. In addition, large transformational transactions faced increased regulatory scrutiny. The rising interest rate environment reduced financial sponsor activity as banks and other lenders dealt with a large backlog of transactions that needed financing.

Photo by James Baltz on Unsplash 

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