Elders Limited Expands with Delta Agribusiness Acquisition and Equity Raising
ELD (ELD) Share Update November 2024 Sunday 17th
Elders Limited Announces Acquisition of Delta Agribusiness and Equity Raising
Elders Limited has announced a significant acquisition of Delta Agribusiness Pty Ltd, a move that will strengthen its position in the agribusiness sector. The acquisition, valued at $475 million, is part of Elders' strategy to enhance its product and service offerings across rural Australia.
Instant Summary:
- Elders acquires Delta Agribusiness for $475 million.
- Delta generated $835 million in revenue and $53 million EBITDA in the last year.
- Acquisition expected to deliver mid single digit EPS accretion pre-synergies.
- Equity raising of $246 million to fund the acquisition.
- Delta's leadership team to remain post-acquisition.
Acquisition Details
Elders Limited, a prominent player in the agribusiness sector, has entered into an agreement to acquire Delta Agribusiness Pty Ltd. The acquisition is valued at $475 million, and it marks a strategic expansion for Elders, enhancing its presence in key rural markets across Australia.
Delta Agribusiness, established in 2006, provides rural products and advisory services through a network of 68 locations. In the last twelve months leading up to June 2024, Delta reported revenues of $835 million and an EBITDA of $53 million. The acquisition is expected to bring significant synergies and strengthen Elders' technical expertise, particularly in ag tech and precision agriculture.
Strategic Rationale
The acquisition aligns with Elders' core strategy of disciplined growth through acquisitions. Delta's geographic footprint complements Elders' existing operations, filling retail gaps in New South Wales, North West Victoria, South Australia, and Western Australia. The integration of Delta's experienced leadership team is expected to preserve the company's culture and strengths.
The acquisition is projected to generate net EBITDA synergies of $12 million annually over the next three years. Additionally, it is expected to deliver mid single digit EPS accretion pre-synergies and mid teens EPS accretion post-synergies for the fiscal year 2024.
Funding and Equity Raising
To finance the acquisition, Elders is undertaking a $246 million fully underwritten pro rata accelerated non-renounceable entitlement offer. This equity raising will be complemented by a $110 million new revolving loan facility and the issuance of $190 million in new Elders shares to Delta shareholders as scrip consideration.
The equity raising is structured to maintain balance sheet flexibility and support future growth opportunities. Elders' directors have expressed their intention to participate in the equity raising, demonstrating confidence in the strategic direction of the company.
The acquisition of Delta Agribusiness is expected to have a positive impact on Elders' stock, as it enhances the company's market position and product offerings. The anticipated synergies and EPS accretion could drive investor interest and boost stock performance in the medium term.
Investor Reaction:
Analysts are likely to view the acquisition favorably, given the strategic fit and potential for synergies. The equity raising and funding strategy are seen as prudent measures to support the acquisition and future growth.
Conclusion:
Investors should consider the long-term benefits of Elders' acquisition of Delta Agribusiness and the potential for enhanced shareholder value. Staying informed on Elders' integration strategy and market performance will be crucial in assessing investment opportunities.