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Permira's Arysta Buyout Takes PE into Agrochemicals

Following earlier advances into agricultural commodity/supply chains and food testing documented on this site, private equity is now staking a claim in the agrochemicals sector.

The European Commission has approved the purchase of the Japan-based agrochemical company Arysta LifeScience by Permira, Europe's largest buyout fund, giving the go-ahead to a deal agreed on last October but awaiting regulatory clearance in the EU to be finalized.

Arysta is the tenth-largest agrochemical TNC by market share, and the largest privately held such company. The company had revenue of 124.1 billion yen (ca. USD 1.2 billion) in 2006 (the last available figure) and has over 2,300 employees in 120 countries. Arysta manufactures a broad range of agrochemicals (herbicides, pesticides, fumigants, etc.) and pharmaceutical and veterinary products.

Among the company's more toxic branded products are the herbicide Trevissimo, a 50/50 cocktail of Glyphosate and Diuron for use on vines (Diuron, a suspected carcinogen, is classified in the US as a developmental toxin); fungicide Sigma DG (80% Captan, a known carcinogen); fungicide Banko 500 (Chlorothalonil, classified as carcinogenic in the EU); fungicide Diafurin, containing the highly dangerous neurotoxin Chlorothalonil; insectide Rocky (Endosulfan, highly hazardous and banned for good reason in the EU); Calfos (Profenophos, a hazardous neurotoxin); and Mitac WP (Amitraz, recognized in the US as a developmental and reproductive toxin).

All of these are hazardous products which the IUF has long advocated banning in view of their threat to human life and health.

When announced in October 2007, Permira had agreed to buy the company for 250 billion yen, of which 100 billion in cash with the rest to be borrowed. Unless the terms of the sale have changed (no details of the financing were given at the time), that means the purchase is heavily leveraged. One of the company's flagship North American products, the herbicide Everest, is touted as taking chemical control "where no herbicide has ever gone. Flush after flush." This LBO can be considered an experiment in the impact on human health of cash flow management in the service of enormous debt when applied to the production of toxic agrochemicals. Will Permira continue the company's commitment to "contribute to many organizations such as those involved in the fight against breast cancer, the Girl Scouts of America and more", Arysta's stated commitment to "social responsibility"?