Mexican firm Mexichem, a producer of plastic pipes, has agreed to acquire control in Israel’s Netafim in a deal that values the drip irrigation firm at $1.895 billlon, Netafim said in a statement Monday.

Mexichem will buy an 80 percent stake in the company from private equity fund Permira, which held a 61.3 percent stake in the Israeli pioneer of drip irrigation systems, and also from Kibbutz Magal and Kibbutz Hazerim, which respectively held six and 33 percent stakes.

Completion of the deal is subject to regulatory permits and is expected to be finalized during the fourth quarter of the year, Netafim said.

Mexichem has committed to preserve Netafim’s activity in Israel for 20 years, including its production and R&D facilities, the statement said.

Mexichem is a manufacturer of products and solutions for a variety of industrial sectors, from petrochemical to construction, infrastructure, agriculture, healthcare, transportation, telecom and energy. It is one of the biggest producers of plastic pipes and connections worldwide and one of the largest chemical and petrochemical companies in Latin America, according to its website.

A sugar cane project in Peru using Netafim drip irrigation systems (Photo credit: Courtesy Netafim)

A sugar cane project in Peru using Netafim drip irrigation systems (Photo credit: Courtesy Netafim)

“This is a strategic acquisition that strengthens our unique basket of solutions and products,” Mexichem Chief Executive Antonio Carrillo Rule said in the Netafim statement, adding that the acquisition will give Mexichem access to Netafim’s “advanced technologies that can be used as a basis for smart solutions in other industrial fields.”

Founded by Kibbutz Hazerim in 1965, Netafim has pioneered the drip irrigation revolution, developing a system that cuts water use by as much as three quarters while ensuring that crops get the water they need to thrive. Since then, the company has widely expanded its offerings to include sprinklers, pipes, irrigation equipment, agricultural machinery, and more, many of them equipped with sensors that can read temperature, humidity, nutrient levels in the soil, whether a plant needs water, and other important data.

The systems are controlled by software run from a server communicating with sensors in the field wirelessly, with the software providing instructions to each part of the system as to how much water should be dispensed and the optimal time for that dispensing. Today, Netafim drip-irrigation systems are used around the world, and the company operates in over 30 countries and has 17 manufacturing plants with sales in over 100 countries.

The company had sales of around $855 million in 2016, the statement said, and has 29 subsidiaries and more than 4300 workers around the world.

Ran Maidan, Netafim’s CEO, said the Netafim was looking for a strategic partner to develop the company and take it forward. With Mexichem “we believe that together we can ensure the continued growth and prosperity of Netafim.” The terms of the accord also “ensure the continued Israeli character of Netafim,” he added.

Netafim said in March it had hired Goldman Sachs to manage a possible sale and a number of companies had expressed an interest.

Shraga Brosh, the president of the Manufacturers Association of Israel, said on Monday that the deal is “a testament, more than a thousand words, to the attractiveness of Israel’s water industry, considered to be one of the most advanced industries in the world.”