THE Mallee and north-west Victoria’s leading agricultural agency business is about to go through its biggest shake-up in decades.
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.
Branches include Ouyen, Swan Hill, Boort, Quambatook, Beulah, Charlton, Hopetoun, Donald, Marnoo, Nullawil, Sea Lake, St Arnaud, Woomelang and Warracknabeal.
Elders chief executive Mark Allison conceded that to pass ACCC scrutiny, part of the takeover may require Elders branches to be sold or shut.
Mr Allison announced the takeover agreement on Monday, but the ACCC wasn’t expected to complete its assessment until February at the earliest.
He said Elders was 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 said.
“Our desire is that there’s no overlap issue.”
Delta has two locations in Swan Hill and Elders has one large operation, albeit currently short-staffed. Ouyen is also a key Elders location, as it is for Delta.
There are also Elders branches in Mildura, Robinvale, Balranald and Barham.
Elders reported its profit was down 55.8 per cent on the previous year to $45.1 million, on revenue of $3.13 billion that was down 6 per cent.
To complete the Delta takeover, Elders planned 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 about 45,000 tonnes of fertiliser storage on the east coast.
Its 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 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 that Delta’s leadership team and operations would 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 said.
“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 north-west Victoria, NSW, South Australia and Western Australia.”
Mr Allison said the takeover would 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 could have an increased 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.
