ACCC approves Nutrien takeover of Ruralco

Canadian group Nutrien’s bid for Ruralco has the approval of the competition regulator, subject to its sale of three rural stores.

Ruralco CEO Travis Dillon. Picture: Renee Nowytarger

The competition regulator has given the all clear to Canadian group Nutrien’s $469 million bid for Ruralco.

The Australian Competition and Consumer Commission said today its approval was subject to Nutrien, which owns Landmark in Australia, selling three rural merchandise stores in Broome in Western Australia, Alice Springs in the Northern Territory and at Hughenden in Queensland, to a purchaser approved by the regulator.

“Ultimately, we decided that the transaction was not likely to substantially lessen competition, as rival rural merchandise retailers and wholesalers will continue to provide strong competition,” ACCC deputy chair Mick Keogh said.

The transaction still needs approval from the Australian Foreign Investment Review Board.

The Australian-listed Ruralco revealed in February that its board had backed Nutrien’s offer, which was for $4.40 a share. When the deal was announced the company said it was a 44 per cent premium on its one-month average stock price.

Shareholders were issued with the scheme booklet on the deal in June, which included the independent expert’s report, which said it was in the best interests of shareholders in the absence of a superior alternative proposal emerging.

When combined, Landmark and Ruralco will own 20 to 25 per cent of rural merchandise stores and will provide wholesale supplies to many other sites.

Landmark supplies rural merchandise through its 225 retail stores across the country as well as supplying independent stores on a wholesale basis. Ruralco provides a similar range of services to Landmark. It operates 106 rural merchandise stores nationally and also supplies member stores via its wholesale arm, CRT.

“The independent sector in rural merchandise is strong, and we considered that it is likely to remain strong, due to the close relationship that independent store owners can build with their local farmer customers,” Mr Keogh said.

“While we had competition concerns in Broome, Alice Springs and Hughenden, these were resolved by the commitment to divest sites in those locations.”

Mr Keogh added that the ACCC also investigated competition impacts that may arise in the provision of wool broking, livestock agency, insurance, finance, real estate and water broking and decided there would not be a substantial lessening of competition in any relevant market.

The regulator is also separately reviewing Elders’ proposed acquisition of AIRR and said it expected to announce its view on that deal on September 12.

The $187m deal will consolidate Elders as the number two rural merchandise operator behind Nutrien’s Landmark stores.

Nutrien chief executive Chuck Magro welcomed the ACCC approval and said the combination of the Landmark operations with Ruralco in Australia would provide significant strategic and financial benefits for all stakeholders.

“This combination is good for Australian farmers, bringing a greater choice of products, services and technologies to Ruralco’s customer base and positioning Australian farmers to succeed in an increasingly competitive global marketplace,” he said.

The deal is expected to be completed on September 30 if all approvals are received.

“With this decision from the ACCC, we are one step closer to a combined Ruralco and Landmark, which we believe will create enormous value for Australian farmers,” the head of Landmark, Rob Clayton, said.