Elders to buy rural merchandise wholesale supplier AIRR for $157 million

Elders Limited plans to buy rural merchandise wholesale supplier Australian Independent Rural Retailers for $157 million.

Elders is to take over Australian independent Rural Retailers, which supplies animal health, feed and crop protection products to about 340 rural merchandise stores across Australia.

ELDERS Limited has announced a takeover of independent rural supplies wholesaler Australian Independent Rural Retailers for $157 million.

On top of the purchase price for AIRR, Elders will also pay out the wholesaler’s existing $30 million in debt.

The move will allow Elders to keep pace with the takeover of Ruralco by Canadian conglomerate Nutrien.

While the Elders-AIRR deal does not include ownership of AIRR’s network of 340 independent rural supplies outlets, it does provide a combined network of more than 550 stores.

The Nutrien takeover of Ruralco, if it secures all regulatory and shareholder approvals, could see a network emerge of 654 Landmark and Ruralco stores across Australia.

Elders managing director Mark Allison said if both deals were approved, “it would make us clear one and two”.

There would remain about 360 other rural merchandise stores outside either network.

AIRR supplies 240 independent stores and 100 Tuckers Pet & Produce stores with more than 6000 animal health, feed and general merchandise products.

Mr Allison said AIRR had 190 product registrations under its own brands: a number of crop protection chemicals under the Apparent brand, plus other animal health and general merchandise products under the Independents Own label.

Elders will pay for the deal through raising equity of $137 million plus the issue of $79 million of its own shares.

AIRR shareholders will be paid half the purchase price in cash and the other half in Elders shares.

Transaction costs are estimated at $10 million and the remainder of the $216 million raised will be used to repay $18 million of Elders’ own debt.

Mr Allison said he hoped the deal would be completed by November.

It is subject to approval by AIRR shareholders, the Australian Competition and Consumer Commission and the court.

“This deal is about putting Australian farmers first,” Mr Allison said.

“It allows us to put more money back into rural Australia.”

AIRR was established in 2006 by founder and long time rural retailer Peter Law to support independent rural retail members through group buying power but without franchise costs or obligations.

It has eight warehouses across Australia and owns five retail outlets.

Mr Law said AIRR had grown consistently since its establishment.

“AIRR is a recognised leader in the wholesale market and we believed that partnering with Elders will add value to our members, farmers and customers,” he said.