Adelaide-based Elders only needs an ACCC rubber stamp early next year to formalise its $475 million acquisition of Delta Agribusiness.
Delta has a network of more than 100 locations – 68 company owned and a further 40 independent wholesale customers.
Elders chief executive Mark Allison concedes to pass ACCC scrutiny, part of the takeover may mean cutting off Elders branches.
Mr Allison said selling off, or shutting, branches might be necessary to convince the corporate watchdog to give his strategy the green ligh.
The takeover agreement was announced recently, but the ACCC isn’t expected to complete assessment until February at the earliest.
Elders is willing to work with the regulator to get the deal done.
“They’ll do their consultation but if the outcome of these are divestments of branches or whatever then that’s doable,” Mr Allison explained.
“Our desire is that there’s no overlap issue,” he said.
The takeover has come at an awkward time for Elders. Its latest financial performance has seen its profit plummet 55.8 per cent on the previous year to just $45.1 million, reflecting a $3.13 billion revenue stream – and that was down 6 per cent.
To complete this bold takeover, Elders also plans to dilute its shareholdings by more than 30 per cent with the goal of plugging key geographical gaps in its footprint.
Delta’s combined offerings include 106 products registered with the Australian Pesticides and Veterinary Medicines Authority (APVMA) and around 45,000 tonnes of fertiliser storage on the east coast.
Delta’s farm inputs business includes crop protection and seeds, animal health products, fertilisers, fuel and general merchandise, as well as an in-house agricultural chemicals and animal health private label brand.
Delta also delivers farm advisory services through its team of agronomist and precision agriculture specialists.
Mr Allison suggested Elders in takeover mood circa 2024 was nothing like the juggernaut days of the 1908s and ’90s under John Elliott, when the business exploded across the country buying everything in sight and slapping the big red E all over it.
He told the ASX Delta’s leadership team and operations will remain unchanged in line with Elders light touch integration strategy.
“Both networks will remain operating as they do today, so customers will continue to experience the same high level of service from both Elders and Delta teams, and the strengths of the respective networks is retained,” he added.
“All decision making at Elders is underpinned by an ambition to provide the best service for our clients and customers and the acquisition of Delta supports that.
“Delta provides us with greater exposure to key local retail markets as well as a market leading agronomy and farm advisory team to complement and extend our products and services range for rural and regional customers, particularly in northwest Victoria, NSW, South Australia and Western Australia.”
Mr Allison said the takeover will also enhance his company’s existing technical service network and through its offering in ag tech and precision agriculture, through Delta’s farm advisory business and respected network of specialists.
The combined entity will dramatically increase its competitive edge against overseas owned Nutrien Ag Solutions.
The Canadian headquartered conglomerate is the largest in the Australian sectors of crop protection, chemicals and farm supplies, with a market share of more than 40 per cent.
