Nutrien Ltd., Saskatoon, said on Feb. 27 that it has entered into a binding agreement with Ruralco Holdings Ltd., Hobart, Tasmania, to acquire all the shares of Ruralco at a price of A$4.40 per share, for a total purchase price of $469 million. Ruralco, listed on the Australian Securities Exchange, has 105,052,247 ordinary shares outstanding and 1,449,648 outstanding performance rights, share rights, and matched shares.
“The combination of our Landmark operations with Ruralco in Australia is expected to provide significant benefits for all stakeholders, including delivering excellent value for both Ruralco and Nutrien shareholders,” said Nutrien President and CEO Chuck Magro. “The acquisition is anticipated to be immediately accretive to Nutrien and is expected to have a post-synergy EBITDA multiple of 5.6 based on 2018 results.”
“The combined business will further strengthen the service and innovation that Landmark delivers to Australian growers,” said Rob Clayton, the head of Landmark. “With an outstanding team across Australia and access to Nutrien’s expertise, we will provide enhanced solutions and greater value to help Australian growers in an increasingly competitive global market.”
Ruralco, founded in 1970, is one of Australia’s leading agriservices businesses, with 216 farm centers and over 500 locations company-wide. It employs over 2,000 staff under a variety of brands. Ruralco provides an extensive range of ag supplies through both its own stores and CRT, Australia’s largest independent retailing group.
Company-wide, Ruralco reported net profit after tax (NPAT) of $25.2 million on revenues of $1.91 billion for the year ending Sept. 30, 2018, up from 2017’s $22.4 million and $1.83 billion.
Ruralco’s Rural Services segment is the company’s largest in terms of revenues. It includes rural supplies, wool agency, real estate, and livestock agency. In FY18, some 31 percent of rural supply sales by type came from fertilizer, with some 33 percent from crop protection, 15 percent animal, health, and feed, 9 percent general merchandise, 7 percent fencing, and 5 percent seed.
Ruralco’s Rural Service segment reported underlying EBITDA of $88 million on revenues of $1.432 billion in FY18, compared to $88 million and $1.434 billion in FY17. Underlying gross profit was $264.6 million, off slightly from the prior year $265.3 million.
Other segments include Water Services, which distributes water products, provides water infrastructure services, and brokers water entitlements to the Australian agricultural sector, and Financial Services and Live Export.
Nutrien’s Landmark has over 200 locations servicing 100,000 clients. In addition to ag inputs, it is also involved in livestock, wool, real estate, insurance, and finance. Nutrien’s predecessor, Agrium Inc., bought Landmark in 2010, and the company said it has tripled its EBITDA.
The transaction will be executed under Australian law and is subject to customary conditions precedent, including Ruralco shareholder approval and regulatory approval from the Australia Competition and Consumer Commission and the Australian Foreign Investment Review Board.