SCHEDULE 13D/A: Tether Proposes $12.41 Per Share Takeover Bid for Adecoagro, Aiming for 51% Stake

Tether Investments, S.A. de C.V., a subsidiary of Tether Holdings, has proposed to acquire additional shares of Adecoagro S.A. at $12.41 per share in cash, seeking to increase its stake to 51% and citing Adecoagro's declining profitability.

Summary

• Tether Investments, S.A. de C.V., along with Tether Holdings, S.A. de C.V. and Giancarlo Devasini (collectively, the 'Reporting Persons'), currently beneficially own 20,398,699 Common Shares of Adecoagro S.A., representing 20.2% of the outstanding shares.
• On February 14, 2025, Tether Investments, S.A. de C.V. sent a letter to Adecoagro S.A. proposing to acquire additional Common Shares at a purchase price of $12.41 per share in cash.
• The objective of the proposed transaction is for the Reporting Persons to collectively hold 51% of Adecoagro's outstanding Common Shares.
• The proposed acquisition would be entirely funded by Tether's existing cash reserves and is not contingent on any financing requirements.
• The proposal is subject to the completion of due diligence, negotiation of definitive agreements, and compliance with local regulatory regimes concerning foreign ownership of land.
• Tether highlighted Adecoagro's recent financial performance, including a 29% year-over-year decline in 3Q24 adjusted EBITDA, materially negative free cash flow of $23 million, increased net debt to $1 billion, and rising leverage to 2.3x.
• Tether believes the acquisition will unlock significant value through strategic investment, technological innovation, and enhanced operational efficiency, aligning with its clean energy and blockchain technology commitments.
• Tether Investments, S.A. de C.V. made open market purchases of Adecoagro Common Shares in January 2025, with prices ranging from $9.5599 to $10.0098 per share.

Sentiment

Score: 7

Explanation: The document presents a strong positive for Adecoagro shareholders through a significant premium offer, indicating a potential liquidity event at a favorable price. However, it also highlights Adecoagro's recent poor financial performance, which is the stated rationale for Tether's intervention. The sentiment is positive for shareholders due to the offer, but the underlying company performance is negative. The score reflects the immediate benefit to shareholders from the offer.

Positives

• The proposed purchase price of $12.41 per share represents a significant premium: 26.6% over the closing price on February 13, 2025; 22.8% over the average closing price since November 13, 2024; and 19% over the average closing price since February 13, 2024.
• The offer price is the highest price that Adecoagro Common Shares have traded since April 20, 2022.
• The transaction is wholly funded in cash from Tether's existing cash reserves, eliminating financing risk.
• Tether believes the acquisition will enhance the potential for long-term appreciation for shares remaining with the public.
• Tether aims to establish a partnership that will unlock significant value through targeted strategic investment, technological innovation, and enhanced operational efficiency.
• Tether's commitment to clean energy and blockchain technology aligns with Adecoagro's efforts to maximize sustainability in its agribusiness.

Negatives

• Adecoagro's profitability has significantly declined, with 3Q24 adjusted EBITDA down 29% year-over-year.
• The company reported materially negative free cash flow of $23 million after dividend payments.
• Adecoagro's net debt has risen to $1 billion, with leverage increasing to 2.3x due to weaker earnings.
• The Sugar, Ethanol & Energy and Farming segments have continued to decline, driven by lower production volumes and rising costs.

Risks

• The Proposed Transaction is subject to the completion of due diligence and negotiation of definitive agreements, with no assurance it will be consummated.
• No legally binding obligation will arise unless and until mutually acceptable definitive documentation is entered into.
• The Reporting Persons may change the terms of the Proposed Transaction, accelerate or terminate discussions, or withdraw the proposal at any time without prior notice.
• Adecoagro's significant landholdings in certain countries are subject to regulatory regimes that limit or regulate foreign ownership of land, requiring local approvals and compliance.
• A drawn-out or failed acquisition may disrupt Adecoagro's business and its relationships with customers, suppliers, and employees.
• The acquisition may result in the delisting of Common Shares from the New York Stock Exchange and termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934.

Future Outlook

Tether intends to engage in discussions with Adecoagro regarding the Proposed Transaction, which aims to increase Tether's collective holding to 51% of outstanding Common Shares. If consummated, Tether anticipates retaining Adecoagro's senior management to drive a new strategic plan focused on targeted strategic investment, technological innovation, and enhanced operational efficiency. The Reporting Persons reserve the right to take additional steps to further the Proposed Transaction or support their investment, including acquiring or disposing of shares, or changing their intentions based on various factors.

Management Comments

• Giancarlo Devasini, President of Tether Holdings, S.A. de C.V. and Sole Administrator of Tether Investments, S.A. de C.V., signed the filing, indicating his direct involvement and oversight of the proposed transaction.
• Tether believes that the Acquisition Proposal is very attractive to Adecoagro's shareholders and will allow them to recognize an immediate and significant cash return.
• Tether firmly believes in establishing a partnership with Adecoagro, which will unlock significant value through targeted strategic investment, technological innovation, and enhanced operational efficiency.
• Tether anticipates that upon consummation of the Acquisition, Adecoagro's senior management would be retained to help drive this new strategic plan for the Company.
• Tether is prepared to work with Adecoagro's Board of Directors, management team, and counsel to negotiate, finalize, and execute a definitive acquisition agreement and complete confirmatory due diligence as swiftly as possible.

Industry Context

This announcement highlights a growing trend of cryptocurrency-related entities, like Tether (issuer of USDT, the largest stablecoin), diversifying their investments into traditional sectors such as agribusiness. Tether's interest in Adecoagro, an agricultural company with a significant South American footprint, aligns with its expanding presence in the region, where USDT is a fast-growing market due to economic instability. The proposal also underscores Tether's stated commitment to clean energy and blockchain technology, suggesting a potential integration of these elements into Adecoagro's operations to enhance sustainability and efficiency, bridging the gap between digital finance and traditional industries.

Comparison to Industry Standards

• The document does not provide specific comparable companies or projects for Adecoagro's financial performance against industry standards.
• Tether notes that USDT is the largest stablecoin with more than 400 million users, indicating its significant position within the cryptocurrency and stablecoin industry.
• Tether's expansion into South America is driven by demand from Argentina and Brazil, reflecting regional economic conditions and the utility of stablecoins in volatile national currency environments, which can be compared to other financial instruments or currencies used for stability in such regions.

Legal Proceedings

• In October 2021, the U.S. Commodity Futures Trading Commission (CFTC) instituted and settled regulatory proceedings against Tether Holdings Limited, Tether Limited, Tether Operations Limited, and Tether International Limited, resulting in a civil monetary penalty of $41 million for alleged untrue or misleading statements regarding USDT backing.
• In February 2021, the Office of the Attorney General of the State of New York (NYAG) entered into an agreement with Tether and several Bitfinex companies to settle a 2019 proceeding, resulting in $18.5 million in penalties and requirements to discontinue trading with New York persons/entities and submit to mandatory reporting.

Related Party Transactions

• Tether Investments, S.A. de C.V. is a wholly owned subsidiary of Tether Holdings, S.A. de C.V.

Stakeholder Impact

• Shareholders: Potential for immediate and significant cash return on tendered Common Shares due to the premium offer. Potential for long-term appreciation for shares not tendered if the acquisition enhances company value.
• Employees: Senior management is anticipated to be retained to help drive the new strategic plan, suggesting stability for key personnel.
• Customers, Suppliers, and Others: A drawn-out or failed acquisition could disrupt business relationships.
• Creditors: The acquisition is fully funded by Tether's cash reserves, which could potentially strengthen Adecoagro's financial position by addressing its rising net debt and leverage, benefiting creditors.

Next Steps

• Tether intends to engage in discussions with Adecoagro regarding the Proposed Transaction.
• Tether and its advisors will require the ability to conduct confirmatory due diligence.
• Tether is prepared to enter into a confidentiality agreement and is requesting an exclusive negotiation period of thirty (30) days.
• Negotiation and execution of definitive acquisition agreements are required.
• Obtaining local approvals and ensuring compliance with regulatory regimes related to foreign land ownership.

Key Dates

Recommendation

Keywords

Adecoagro S.A., Tether Holdings, Tether Investments, Schedule 13D, Takeover Bid, Tender Offer, Acquisition Proposal, Common Shares, Shareholder Value, Agribusiness, Agricultural Company, SEC Filing, Corporate Control, Strategic Investment, Financial Performance, EBITDA, Free Cash Flow, Net Debt, Leverage, Sugar Ethanol Energy, Farming Segment, USDT, Stablecoin, Blockchain Technology, El Salvador Entity, Luxembourg Company