Jump in Elders shares following trading halt
Elders’ share price has lifted following a two-day trading halt.
Elders share price has lifted following its proposed acquisition of Australian Independent Rural Retailers (AIRR).
The agribusiness was placed in a two-day trading halt on Monday and Tuesday following news of the acquisition.
Elders share price closed at $6.13 on Friday and opened at $6.25 today. By midday, the price had risen to $6.97.
AIRR is a national rural merchandise buying group that has 20 member stores in South Australia, all of which are independently owned.
Managing director Mark Allison said wholesaling to independent retailers provided an attractive growth avenue for Elders.
“We don’t have any wholesale channel and AIRR is very strong in that area,” he said.
“About 100 of their members are in produce and hobby farming areas, so it’s quite complementary to our business. AIRR is also very strong in the pet supplies area.
“All the AIRR stores will continue to run independently, as they already are.”
Cox Rural owner Lachlan Cox, who operates AIRR member stores in Coonalpyn, Jamestown, Keith, Tintinara, Clare and Naracoorte, said the acquisition would enhance his company’s purchasing power when negotiating terms with key suppliers.
“There’s a great opportunity to leverage off both businesses, while still remaining independent,” he said.
Cox Rural has been running since 2002 and was a founding member of AIRR since it started in January 2006.
Elders has completed an institutional placement and entitlement offer, which attracted strong support from both existing and new institutional shareholders, raising about $100 million at an offer price of $5.55 per new share. About 92 per cent of entitlements available to eligible institutional investors were taken up.
“We are pleased with the strong support shown by new and existing shareholders for the equity raising and acquisition of AIRR,” Mr Allison said.
A retail entitlement offer is expected to raise about $37 million and will open at 9am on Monday, July 22.