India's Jain buys two California irrigation firms

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Jain Irrigation Inc. A Jain irrigation system used in an indoor growing facility.

The U.S. subsidiary of Jain Irrigation System Ltd. (JISL), which is headquartered in Jalgoan, India, has agreed to acquire a stake of two micro-irrigation dealers in California that are merging ownership to form a larger distribution company.

The subsidiary, Jain Irrigation Inc. (JII) in Fresno, Calif., will pay up to $48.5 million cash for an 80 percent stake in Agri-Valley Irrigation Inc. (AVI) and Irrigation Design and Construction Inc. (IDC), according to The deal is expected to close in a few weeks.

JII announced the transaction on April 18, however, no terms of the strategic investment were disclosed by the subsidiary or either of the privately held U.S. dealers.

AVI and IDC will keep their names and current staff will oversee daily operations, but they will report to the board of directors of a newly formed entity called Jain Distribution Holdings Inc. The combined entity will have 13 dealership locations in California offering design and construction services and irrigation technology that Jain officials say will help farmers get "more crop per drop."

California's five-year drought — the worst in centuries — is officially over thanks to a wet winter although some places are still behind in rainfall. Gov. Jerry Brown lifted the state of emergency on April 7 for all but four counties. The emergency declaration went into effect in January 2014.

With rain levels returning to normal, the irrigation business in California is expected to pose a good business opportunity. Micro irrigation, which delivers small amounts of water to precise locations, is said to reduce water use and boost crop yields by 50 percent or more.

"We are delighted to be able to finance and participate in such an industry-changing and strategic partnership," JISL CEO Anil Jain said in a news release. "The transaction gives us the capability to provide grower focused, turnkey, end-to-end project solutions, consistent with our global solutions and capabilities."

With revenue of more than $1 billion and 30 manufacturing plants worldwide, JISL serves the agricultural, piping and infrastructure markets with micro-irrigation systems, PVC and HDPE pipes, plastic sheets and more. The company is the largest manufacturer of drip irrigation equipment in India and the world's second biggest. Micro irrigation is its largest business unit.

The pending deal builds on the strengths of three companies and will allow them to offer growers the most comprehensive services, IDC President Michael Conrad said in the release. Based in Patterson, Calif., IDC opened in 2004 and has seven retail outlets serving the central region and Salinas Valleys with more than 100 employees specifying and installing irrigation equipment.

AVI was founded in 1983 and is run by CEO Larry Rompal and his family and team. The business serves mostly the central San Joaquin Valley with more than 125 employees who design, fabricate, install and maintain drip irrigation systems, micro sprinkler systems, filters, pumps and monitors.