The Australian Competition and Consumer Commission (ACCC) said on Aug. 22 that it will not will not oppose the proposed acquisition of rural services company Ruralco by Nutrien Ltd., Saskatoon, which operates in Australia through its wholly-owned subsidiary, Landmark. However, ACCC said Nutrien is required to divest three rural merchandise stores located in Broome, Western Australia, Alice Springs, Northern Territory, and Hughenden, Queensland, to a purchaser approved by the ACCC (GM Aug. 2, p. 30).
“We are very pleased with today’s decision,” said Nutrien President and CEO Chuck Magro. “We continue to believe the combination of our Landmark operations with Ruralco in Australia will 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. The transaction is expected to deliver excellent value for both Ruralco and Nutrien shareholders.”
“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,” said Rob Clayton, who heads Landmark. “By leveraging the global reach of Nutrien, our people – who live and work in rural and regional Australia – will deliver enhanced solutions and services, products, and innovation to Australian growers.”
With regulatory approval received from the ACCC, the transaction now requires approval from the Australian Foreign Investment Review Board (FIRB). Upon securing the necessary approvals from the FIRB, as well as Ruralco shareholders, the transaction is anticipated to be completed on Sept. 30, 2019.
ACCC said it examined the acquisition very closely, as it combines two of three major retail chains in the rural merchandise market. Combined, Landmark and Ruralco will own 20-25 percent of rural merchandise stores, and will provide wholesale supply to many other sites.
“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 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.
“Customer relationships and service are more important than branding to many customers in this industry, and this provides greater scope for independent retailers to compete than is the case in some other retail industries,” he added. “While we had competition concerns in Broome, Alice Springs, and Hughenden, these were resolved by the commitment to divest sites in those locations.”
The ACCC also investigated competition impacts that may arise in the provision of wool brokering, livestock agency, insurance, finance, real estate, and water brokering, as well as potential issues that may arise from vertical integration between the retailing and wholesaling of rural merchandise. “Ultimately we decided that there would not be a substantial lessening of competition in any relevant market,” said Keogh.
The ACCC started the review of the proposed acquisition in March 2019 and raised concerns in June (GM June 14, p. 25), seeking submissions from interested parties.
Nutrien said Landmark serves farmers through a national network that services 100,000 clients in over 200 locations. It operates across merchandise, livestock, wool, real estate, insurance, and finance.
Ruralco has around 157 rural merchandise locations nationally, supplying around 244 independent member retailers and employing over 2,000 staff under a variety of brands, according to Nutrien, serving farmers an extensive range of ag supplies through its owned stores and to independent retailers through CRT, Ruralco’s wholesaling business. Ruralco is also a leading distributor of water products, provider of water infrastructure services, and broker of water entitlements to the Australian agricultural sector.