Australian rural services firm Ruralco Holdings on Wednesday, February 27, backed a $337 million takeover bid by Canada’s Nutrien, the latest potential tie-up in a sector consolidating in the face of severe drought.
Fertilizer giant Nutrien, which owns Landmark, one of the largest agricultural businesses in Australia, offered AU$4.40 a share in cash for rival Ruralco, representing a premium of about 44% to the company’s last close.
The deal is likely to face antitrust concerns as it would merge two large rural supply firms to create a sector heavyweight.
“Effectively it is about the No. 1 market player buying No. 3,” Philip Pepe, senior analyst at Blue Ocean Equities stated. “It is a fair price for the Ruralco shareholders and it should attract some synergies if the regulator allows it to go through.”
Ruralco said in a statement its board unanimously recommended Nutrien’s offer in the absence of a superior proposal, sending its shares soaring 47 percent to AU$4.50, its highest price in over a decade, before closing at AU$4.44, still above the offered price.