Cade approves purchase of Reference Agroinsumos by Lavoro

The Administrative Council for Economic Defense (Cade) approved the purchase of Reference Agroinsumos by a subsidiary of Lavoro Agro without reservations. The deal was communicated to the market on 13/03/2023. The request to the federal authority occurred on 29/03. Opinion recommending approval and order authorizing the operation were signed today (26/04). It is still necessary to publish in the Official Gazette and the appeal deadline to pass.

According to the opinion that approved the operation, "for the Malinas Group, the operation is in line with its strategic plans to expand its activities in the agricultural input distribution market, specifically in the state of Rio Grande do Sul, in which the Lavoro Agro's presence is still insignificant".

The so-called Grupo Marilnas (Malinas S.A.) is a Uruguayan legal entity that, according to information contained in state records, fully controls Lavoro Agro, which controls Distribuidora Pitangueiras de Produtos Agropecuários S.A., which acquired the shares of Reference Agroinsumos Ltda.

The opinion that "the applicants reported that the Operation will result in horizontal overlaps in the following segments of the agricultural input distribution market: (i) distribution of fertilizers (NPK and special); (ii) distribution of agricultural pesticides (fungicides, insecticides and herbicides ); (iii) distribution of adjuvants; (iv) distribution of soybean, corn and rice seeds; (v) distribution of biological products; and (vi) distribution of products classified as 'other specialties', in the state of Rio Grande do South and in Brazil".

Furthermore, the same document states that "the parties also identified that the operation will result in potential vertical integration between the manufacturing (production) and distribution of agricultural inputs (specifically, fertilizers, pesticides, adjuvants and biological products)".

In any case, "according to the data presented by the applicants, there would be no reason for competition concerns".

Therefore, Cade concluded that the acquisition does not represent any risk to competition. In the words contained in the opinion, "the present operation does not raise major concerns in terms of competition, due to the low market shares held by the applicants in horizontally and vertically related markets".

In recent years, Malinas S.A., through other legal entities, made several acquisitions in Brazil. Between them:

1) Terraverde Holding S.A. buys Lavoro Agrocomercial Ltda;

2) Terra Verde Holding S.A. buys Distribuidora Pitangueiras de Produtos Agropecuários Ltda;

3) Lavoro Agrocomercial S.A. buys Impacto Insumos Agrícolas Ltda.;

4) Lavoro Agrocomercial S.A. buys P.C.O. - Commerce, Import, Export and Agriculture Ltd. (“Agrovale”);

5) Terra Verde Holding S.A. purchases more than 50% of the shares of Produtec Comércio e Representações Ltda.;

6) Lavoro Agrocomercial S.A. buys C.A. Rural Distribuidora de Defensivos Agrícolas Ltda. (“Central Agrícola”);

7) Produtec Comércio e Representações S.A. buys Integra Soluções Agrícolas Ltda. (“Integra Negócios”) and Integra Soluções Agrícola Ltda. (“Integra Soluções”);

8) Distribuidora Pitangueiras de Produtos Agropecuários S.A. buys a majority stake in Qualiciclo Agrícola Ltda.;

9) Lavoro Agrocomercial S.A. buys América Insumos Agrícolas Ltda.;

10) Distribuidora Pitangueiras de Produtos Agropecuários S.A. acquires most of the shares of Cultivar Agrícola - Comércio, Importação e Exportação Ltda.;

11) Distribuidora Pitangueiras de Produtos Agropecuários S.A. acquires all of the shares of Desempar Participações Ltda., Plenafértil Distribuidora de Insumos Agrícolas Ltda., Futuragro Distribuidora de Insumos Agrícolas Ltda., Realce Distribuidora de Insumos Agrícolas Ltda., Deragro Distribuidora de Insumos Agrícolas Ltda ., Denorpi Distribuidora de Insumos Agrícolas Ltda. and Desempar Tecnologia Ltda.;

12) Produtec Comércio e Representações S.A acquires control of Produtiva Agronegócios Comércio e Representações Ltda.;

13) Crop Care Holding S.A., through Araci Administração de Bens S.A., acquires part of the share capital of Union Agro Ltda.;

14) Facirolli Comércio e Representações S.A. (“Agrozap”) acquires a stake in the share capital of Produtec Comércio e Representações S.A.'

15) Facirolli Comércio e Representações S.A. (“Agrozap”) acquires a stake in the share capital of Floema Soluções Nutricionais de Cultivos Ltda.;

16) Distribuidora Pitangueiras de Produtos Agropecuários S.A. acquires control of Casa Trevo Comercial Agrícola Ltda. and CATR Comercial Agrícola Ltda.;

17) Distribuidora Pitangueiras de Produtos Agropecuários S.A. acquires Sollo Sul Insumos Agrícolas Ltda. and Dissul Insumos Agrícolas Ltda.

UPDATE ON 28/04/2023: the decision was published in today's official gazette.