After fourteen years of foreign ownership, drip irrigation company Netafim could be in Israeli ownership once again. Private equity firm Fortissimo, headed by Yuval Cohen, is seen as a leading candidate to buy the Kibbutz Hatzerim-based company that is identified with one of Israel’s most famous inventions. Fortissimo values Netafim at about $1 billion, but it is not certain that the company’s current owner, Orbia of Mexico, which holds an 80% stake, will agree to such a low price. Orbia (formerly Mexichem) acquired Netafim for almost $1.9 billion in 2018.
The assessment on the market is that a deal will be closed within a few weeks, and that if Fortissimo is the buyer, it will shake up the irrigation company in an attempt to unlock value. To judge from previous moves by the firm in recent years, it may be that Netafim’s current CEO, Gabriel (Gaby) Miodownik, who has South African roots and good connections with the management of the Mexican company, will join the list of managers who have been moved on after an acquisition by Fortissimo.
Orbia CEO Sameer Bharadwaj has for months been sounding out the possibilities for a sale of Netafim. The Mexican company is coping with rising debt, and the global stagnation in the precision irrigation industry is hurting Netafim’s results. Senior sources in the industry have been trying to sketch Fortissimo’s possible moves.
Fortissimo is expected to propose to additional investment bodies to join it in the investment, on a model similar to the one it has employed in the past. Last May, Fortissimo took over telecommunications company Cellcom, together with major financial entities such as Migdal, Discount Bank, Bank Leumi, Mizrahi Tefahot Bank, and others. If Fortissimo does manage to close a deal, it is expected to do so on a similar model, but it has not yet settled on the identity of its partners. After taking over Cellcom, Fortissimo led a swift process of replacing the CEO, appointing Eli Adadi to the post.
As far as is known, Fortissimo does not plan to enhance and float Netafim, or to merge it with another major company in the irrigation sector such as Rivulis, a competitor that was enhanced and sold at a considerable profit by private equity firm FIMI to Singapore-based investment fund Temasek.
Netafim was founded in 1965 at Kibbutz Hatzerim. The founder and inventor Simcha Blass, chief engineer at water company Mekorot, thought up the idea of drip irrigation, a special mechanism that feeds water in a measured and direct way to the roots of a plant. He managed to interest Kibbutz Hatzerim in developing the idea, which became a roaring business success around the world, and in fact created the field of precision irrigation. Since then, Israel, a country with a chronic shortage of water and of agricultural land, has become a power in the sector. Companies such as Plastro-Gvat, which became part of Rivulis, alongside other kibbutzim such as Naan, which set up NaanDan Irrigation, developed solutions of their own.
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In 2006, Israeli investment funds Markstone and Tene Capital invested in Netafim. Five years later control of the company was sold to European investment firm Permira at a valuation of $850 million, and, as mentioned, in 2018 it was sold to Orbia at a valuation of nearly $1.9 billion (including debt). Since that acquisition, however, Netafim’s business has not grown substantially. Last year it had revenue of $1.04 billion, 2% less than in the previous year. Operating profit was cut in half to $6 million, and EBITDA rose by just 6% to $125 million. The trend in previous years was similar.
Meanwhile, Orbia’s debt has swollen. At the end of the first half of 2025, its long-term liabilities totaled $6 billion, up 6% within a year. Its total liabilities amount to $8.6 billion, which is apparently pushing the company’s management to sell Netafim in order to reduce its leverage. Netafim’s own debt is not known.
With new CEO, the music changed
“The desire to sell Netafim has been in the open for a long time in the industry,” a source familiar with the matter says. “When Orbia’s current CEO took up the post, the music changed. For years, the company had not succeeded in creating synergy with its other businesses. Netafim did not manage to develop new markets or to increase its revenue. None of the ideas and promises materialized. Even at the time, when Netafim was bought, the price seemed divorced from reality.”
What can Netafim’s new owners do from a business point of view? “It’s a market that has been somewhat at a standstill in the past few years,” another investor says. “In drip irrigation in recent years it has mainly been American companies that have grown and tried to compete with Netafim’s products. This will force Netafim to invent new things, and the deal will be measured by this criterion. Within five years, Netafim will have to invent new products, new irrigation methods, or smarter use of fertilizers in its systems. Anything that will enable its product to continue to be breakthrough, because the companies competing with it today are copying what it created four to five years ago. Historically, Netafim has always been able to stay ahead of its competitors, but that is becoming more and more challenging.”
“The market won’t disappear, but the competition is fierce”
Today, Netafim is a global company, employing some 4,500 people in 110 countries. It leads its field, but precision irrigation represents just 2% of agricultural irrigation globally. This is because there are vast areas in which there is no shortage of water, or farmers that don’t have the capital required to invest in sophisticated methods.
“There’s no doubt that Netafim’s market is important and stable and isn’t going to disappear,” the investor says. “The question is the price at which Orbia will be prepared to sell its shares, and subsequently how Netafim’s competitors will act. The more your technology develops the higher your level of excellence, but in the end it’s holes in a pipe. There are smart elements, such as maintaining water pressure throughout the field, correct spreading of fertilizer, and so forth, but the competition is fierce, and life won’t be easy for the potential buyers.”
Published by Globes, Israel business news – en.globes.co.il – on October 20, 2025.
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