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Croda eases the pain for Plant Impact

European arm of the chemicals giant has agreed to pay £10m for Plant Impact
February 22, 2018

Back in November 2016, we wrote that Plant Impact’s (PIM) heavy reliance on the Brazilian soybean market wasn’t causing chief executive John Brubaker much concern. He was confident that the concentration was a risk worth taking given the prospects of the company’s primary product, Veritas, which is designed to enhance the yield of soybean crops. 

Perhaps Mr Brubaker (and the Investors Chronicle) should have been more wary. Just over a year later he was forced to put his company up for sale after its Brazilian distributer, Bayer CropScience, deferred its stock purchasing and said it could not meet the commitments of the partnership.

The problems in Brazil meant management was forced to cut revenue expectations for the 2018 financial year in half and warn investors that the group’s cash resources were waning. Plant Impact said it would need more cash before April 2018 and therefore decided the best option would be to put itself up for sale.

Two months of worry have ensued for management (and the shareholders who stayed invested) but finally an offer has been confirmed. The European arm of chemicals giant Croda (CRDA) has agreed to pay £10m for the company. This may be an 80 per cent premium to the value on the day before the offer was announced, but is only a quarter of the group’s market capitalisation back in November 2016.

The company can at least take solace in the fact that Croda plans develop the Plant Impact business within its life sciences sector and support the group in achieving its goals and global potential. Investors, however, are just going to have to accept their 10.6p cash per share.