The Elders Ltd (ASX: ELD) share price is trading lower today after the agribusiness company announced the successful approval of a takeover this morning by the Federal Court. ELD shares opened at $6.02 today but dipped lower during today's trade to close at $5.95 per share.
What exactly did Elders announce?
In a publication released before trading this morning, Elders announced that the acquisition of 100% of the shares of Australian Independent Rural Retailers, otherwise known as AIRR Holdings Ltd, which is a private company. The Court decision (and takeover) will become legally effective when the paperwork is lodged with ASIC tomorrow. Elders expects the deal to be finalised by next month on November 13.
Shareholders of both companies have already approved the merger, with the owners of Elders giving it a 99.47% approval and AIRR a 97.84% tick. In early September, the ACCC also gave its blessing to the merger, saying that competition and vertical integration concerns were not enough cause for the marriage to not proceed.
What does this mean for Elders?
Elders provides livestock, grain, farm supplies and financial services across the agricultural sector in Australia and New Zealand. AIRR owns a network of farming supply stores supplying everything from fencing, clothes and hay to weed control products and pet food. It also acts as a wholesaler to over 2,000 independent rural retail stores.
The acquisition of AIRR may help boost Elder's presence and reach across rural Australia, as well as providing some cost synergies.
The Elders share price has been struggling of late, with the company's 52-week high of $8.66 a long way off today's share price. Even in the last three months, ELD shares have lost over 20% of their value, so Elders investors would no doubt be hoping that this acquisition rights the ship.
