Jain Irrigation Systems Ltd. (JISL) has made a strategic investment, acquiring an 80 percent stake in Agri-Valley Irrigation (AVI) and Irrigation Design and Construction (IDC), two of the largest micro irrigation dealers in the U.S., for a total consideration of $48 million. The acquisitions will be carried out through Jain’s California-based wholly owned subsidiary, Jain Irrigation Inc. (JII).
Both AVI and IDC, which have posted combined revenue for the 12 months ending December 2016 of $113 million, have agreed to merge ownership of their companies into a newly formed company that will establish a novel platform designed to offer farmers and other customers leading design, construction, and agtech services while also helping growers implement state-of-the-art technologies.
The combined platform will bring together AVI, which was founded in 1983 and has grown to provide unique irrigation services to agricultural producers across the San Joaquin Valley, and IDC, which was begun in 2004. IDC now has seven retail locations in the Central and Salinas Valleys and installs the latest cutting-edge irrigation systems to help growers maximize their efficiency and value. Both will benefit from the backing of JISL, a multinational company that generates yearly revenue of $1 billion through its work serving the agricultural industry, and meeting infrastructure needs with micro-irrigation systems, PVC and HDPE piping, plastic sheeting, agro processing products, and renewable energy solutions, among others.
“The transaction gives us the capability to provide grower-focused, turn-key, end-to-end project solutions, consistent with our global solutions and capabilities. With the newly formed company, we’ll be able to deliver leading agriculture technology irrigation solutions from our recent investments,” said Anil Jain, chief executive officer of JISL.
The double acquisition is a highly strategic move in one of the top irrigation markets in the world. The deal will enable JII, the group’s existing U.S. subsidiary, to forward integrate into the U.S. supply chain, and build relationships with growers in the market. It also will facilitate Jain’s plans to be a provider of end-to-end irrigation solutions.
The deal is also geographically important. The recent California drought that pressured the state’s agricultural producers for four years has since subsided, indicating broad opportunity for irrigation technology players over the next two years, according to Business Standard.
Indeed, the Sacramento Bee states that after experiencing the unforgiving effects of climate change on their operations firsthand, many sophisticated, tech savvy farmers are more than ready to begin upgrading their water management systems to include drip irrigation, sensors, and GPS to gain the most per drop. Doing so is estimated to potentially save between 4.5 million and 6 million acre feet of water per year, or equal to the volume of water used by up to 30 million people in the state annually, according to the NRDC.
For farmers, increased efficiency in water usage systems brings multiple benefits, according to the Pacific Institute, including reducing costs of purchasing water and reduces energy costs through cutting the need to pump groundwater. It can also result in improved crop yields and quality, and plants that are more resistant to adverse conditions, while benefitting the environment.
“This merger will build upon the strength of our three companies and allow us to provide growers with the most comprehensive levels of service. Agri-Valley Irrigation and JISL share our philosophy of doing what is right for the customer and industry. We look forward to working together to move the irrigation industry forward,” said Michael Conrad, president of Irrigation Design and Construction Inc.
-Lynda Kiernan
Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com.