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JERUSALEM, Aug 7 (Reuters) - Mexican industrial group Mexichem has agreed to buy an 80 percent stake in Israeli irrigation firm Netafim in a deal valuing the company at $1.895 billion, Netafim said on Monday.
Mexichem will pay some $1.5 billion, acquiring a 61 percent stake owned by private equity and buyout firm Permira, which bought into Netafim in 2011, before it roughly doubled in value.
Another 6 percent will come from Israel's Kibbutz Magal and 13 percent from Kibbutz Hatzerim, which will remain a minority shareholder with a 20 percent stake.
Mexichem, whose products range from petrochemicals to plastic pipes and which operates more than 120 production plants in over 30 countries, has a market value of $6 billion.
The deal is expected to close in the fourth quarter of 2017, subject to various approvals.
Netafim, which was founded in 1965 and pioneered drip irrigation technology, has 17 manufacturing plants and 4,300 employees worldwide. It also offers crop management technologies such as monitoring and control and dosing systems and crop management software.
Its sales in 2016 totalled about $855 million.
Citing good results in prior years and a positive outlook, the company said in March it had hired Goldman Sachs, Bank of America Merrill Lynch and CenterView to handle a possible sale or public offering and several groups had expressed an interest.
"The acquisition will give Mexichem access to advanced technology that can be used as a base for 'smart' solutions in other industrial fields," Mexichem Chief Executive Antonio Carrillo Rule said in a statement in Hebrew issued by Netafim.
Under the agreement, Netafim's core activities in production and research and development will be kept in Israel for at least 20 years.
"The company will remain independent. The management team and myself will keep running the company," Netafim Chief Executive Ran Maidan told Reuters. "We will be able come with all the advantages of being a part of a group, and on the other hand we will maintain Netafim's independent character and identity."
Maidan said he expected Netafim to help Mexichem expand in foreign markets like India where it has a strong foothold, while Netafim should benefit from Mexichem's presence in Latin America.
JP Morgan advised Mexichem in the transaction.
Reporting by Ari Rabinovitch and Steven Scheer; Editing by Greg Mahlich