SYDNEY: Elders Limited has announced it will acquire 100% of the shares in Delta Agribusiness Pty Ltd for an enterprise value of $475 million.
Delta is an Australian agribusiness offering rural products and advisory services through 68 locations and around 40 independent wholesale customers. In the last twelve months leading up to June 30, 2024, Delta generated revenue of $835 million and EBITDA of $53 million.
The acquisition values Delta at approximately 11.1 times its last twelve months’ adjusted EBIT before synergies and 8.7 times adjusted EBIT post synergies. This strategic move will fill retail gaps in New South Wales, North West Victoria, South Australia, and Western Australia, while enhancing Elders’ technical expertise in ag tech and precision agriculture.
Delta’s leadership team is excited to join Elders and will continue to manage the business post-acquisition. Elders expects to generate net EBITDA synergies of $12 million per year, gradually realized over the next three years. The acquisition is projected to deliver mid-single-digit earnings per share (EPS) growth pre-synergies and mid-teens EPS growth post-synergies for FY24.
The transaction will be funded through a $246 million fully underwritten pro rata accelerated non-renounceable entitlement offer, a $110 million new revolving loan facility, and $190 million worth of new Elders shares issued to Delta shareholders at $8.52 per share, equating to approximately 22 million shares. All eligible Elders directors have confirmed their intention to participate in the equity raising. Elders expects the combined group’s net debt to EBITDA ratio to be around 2.0x by March 31, 2025, pre-synergies.
Mark Allison, Elders Managing Director and CEO, said, “The acquisition of Delta continues Elders’ successful track record of growing our business through disciplined acquisitions.
Delta provides us with greater exposure to key local retail markets as well as a leading agronomy and farm advisory team to complement and extend our products and services range for rural and regional Australia.
Elders has a proven track record of synergy generation through backward integration and expects that the acquisition will create meaningful value for Elders’ shareholders.
The culture and strengths of Delta will be preserved through our light touch integration strategy, and we look forward to welcoming the Delta management and employees to Elders.”
Gerard Hines, Delta Managing Director and Co-Founder, said, “There is strong cultural alignment between Elders and Delta, as two trusted agribusinesses seeking to create value for our customers.
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.”