The agribusiness announced on Monday it had entered a scheme of implementation to acquire 100 per cent of AIRR’s shares, with the half-scrip, half-cash bid already receiving the blessing of the takeover target’s board.
Elders, which remains in a trading halt, said it was funding the acquisition through a $137 million equity raising and the issue of $79 million of new Elders shares to AIRR shareholders as scrip consideration.
The $10.85 per share deal values AIRR at $157 million on an equity basis and $187 million on an enterprise value basis.
Elders said the acquisition will allow it to enter the wholesale rural services market with net synergies of $6.6 million to $9.33 million per annum to be gradually realised over the next two years.
“Acquiring AIRR will give Elders a national wholesale platform,” Elders chief executive Mark Allison said on Monday.
“By preserving continuity of AIRR’s key management team and independent identity through a light touch integration, AIRR will continue to deliver the benefits to its independent members which have enabled it to achieve a track record of consistent growth.”
Established in 2006, AIRR is a member-based buying and marketing group for independent rural merchandise and pet and produce stores.
The business is supported by a network of eight warehouses servicing more than 1,500 customers, with approximately 240 independent member stores and an additional 100 Tuckers Pet and Produce stores.
AIRR also owns and operates five retail locations in Victoria.
In September 2018, AIRR acquired The Hunter River Company, which products for cattle, sheep and equine health.
Elders said AIRR is expected to generate earnings before tax of $21.9 million for the twelve months to September 2019.
Shares in Elders were trading at $6.13 prior to entering a halt at Monday’s open.
The company has also reaffirmed its 2019 guidance of $61 million to $64 million in underlying net profit.
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