ASX-LISTED company Elders Limited has announced it has entered into an agreement to acquire Delta Agribusiness for $475 million.

Founded in 2006 by Gerard Hines and Chris Duff, Delta provides rural products and advisory services to customers in New South Wales, Queensland, Victoria, South Australia, and Western Australia.

The acquisition will add Delta’s network of 68 locations and approximately 40 independent wholesale customers to Elders’ existing portfolio.

Elders will also gain: Delta’s Precision Ag model; in-house agricultural chemicals and animal health Four Seasons Agribusiness label, and a minority stake in irrigation management technology and analytics platform, Goanna Ag.

Delta’s total sales revenue for the past 12 months was $835M, with crop protection and fertilisers accounting for 67 percent of Delta’s sales.

The company also boasts agency and financial services with the grain business marketing approximately 500,000 tonnes of grain in the 12 months to September 30.

Elders managing director and chief executive officer Mark Allison told shareholders at the company’s full-year financial results briefing that the purchase will have minimum impact on Delta’s day-to-day operations.

“It really has strengths where we have weaknesses and vice versa,” Mr Allison said.

He highlighted Delta’s “geographical footprint” with strong representation in NSW, north-west Victoria, and parts of SA and WA, as well as its expertise in precision agriculture, as key positives.

He described Delta as “a very strong, positive business and very aligned with its rural products, digital tech services and…financial services.

“There is a lot of positive upsides where customers and communities will be better off for the listed governance approach and the capital availability for Delta to continue to serve them.

“Elders clients will equally be better off through the better buying positions that we can gain through the group.”

Mr Allison said the purchase will have minimal impact on Delta’s day-to-day operations.

He will join the Delta board as chair, with Elders chief financial officer Paul Rossiter also becoming a board member.

“We maintain the executive directors and potentially one non-exec director and we basically carry on as the business has been run historically in a very successful way.

“Delta is a very successful business with very good people and it’s not to the benefit of any (of) our shareholders, our people, their people, for us to get in the way of a successful formula.”

Delta managing director Mr Hines said existing customers should be assured the business combination will only positively impact them.

“There is strong cultural alignment between Elders and Delta, as two trusted agribusinesses seeking to create value for our customers,” Mr Hines said in a statement.

“Our management team will remain unchanged, and we are excited to be able to continue to provide our customers with innovative and value-adding business solutions with the added support of Elders.”

Elders expects completion of the acquisition to occur in the first half of CY25.

Mr Allison said the timing was principally due to the time expected to satisfy the Australian Competition and Consumer Commission clearance condition.

He said Elders had considered the potential issues for ACCC approvals where “there are branches of both Delta and Elders in towns”.

“We’ll await the advice from the ACCC.

“Our feeling is that…we have a solid case, and we plan, by having separate networks, to ensure that the focus on our customer centricity remains very, very high as we go through this process.”

FY24 financial results

Elders recorded underlying earnings before interest and tax of $128M for the full year ending September 30, down from $170.8M in FY23.

The company attributed this result to a negative earnings impact from the first quarter which resulted from low livestock prices, lower crop-protection margin, and subdued client sentiment.

In the retail products segment, sales uplift in the animal health category, offset by weaker fertiliser and crop-protection sales which were predominantly impacted by lower prices.

Wholesale products achieved margin growth, with animal health products benefiting from the recovery in livestock prices following the first quarter lows, while agency services also reported margin growth driven by an improvement in cattle and sheep prices.

The company was optimistic about the 2024 summer crop, with favourable moisture profiles in many dryland areas, and average seasonal conditions across irrigated cropping regions.

Mr Allison said the results show Elders’ resilience thanks to product, channel, and geographical diversification.

“Elders’ FY24 performance has reaffirmed for us the importance of commitment to a tightly managed cost base and a geographically diverse multi-product portfolio, to deliver strong earnings and value for shareholders through the cycles.”

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