Ruralco spends $61m on more water, merchandise stores

Ruralco spends $61m on more water, merchandise stores


Farm Online News
Ruralco is investing heavily in more water equipment supply and irrigation planning services as part of its latest $60.8m spend on new businesses in Western Australia, South Australia, Victoria, Tasmania and NSW.

Ruralco is investing heavily in more water equipment supply and irrigation planning services as part of its latest $60.8m spend on new businesses in Western Australia, South Australia, Victoria, Tasmania and NSW.

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Ruralco’s shares are in a trading halt after the agribusiness announced it will raise up to $65 million to pay for new water and farm services acquisitions.

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Ruralco’s shares are in a trading halt after the agribusiness announced it will raise up to $65 million  to pay for about $60.8m in new water businesses and farm services acquisitions.

The company is buying Irrigation Tasmania for $19.9m, Mildura Irrigation Centre in Victoria, and River Rain Irrigation in Renmark, South Australia.

The new water equipment and advisory services additions to Ruralco’s stable follow deals recently locked in for Riverland Irrigation in SA and Hunter Irrigation in NSW.

The company’s farm merchandise retail division will expand with the purchase of NSW Central Tablelands Combined Rural Traders (CRT) business, Sid Newham Rural Supplies, in Bathurst.

Ruralco also recently announced it was buying Great Northern Rural Services in Western Australia and last week received Australian Competition and Consumer Commission’s approval for a $16m take over TP Jones’ rural merchandise stores in Tasmania.

Its CRT wholesale business is already a supplier to the CRT member stores being acquired.

Managing director, Travis Dillon, said by buying existing independent CRT members Ruralco earnings from each geography would grow from purely wholesale revenue to a vertical margin encompassing wholesale and retail.

“We’ve identified specific geographic gaps in our rural services footprint and aligned growth initiatives to fill these,” Mr Dillon said.

“Investment in water business has potential to reduce the cyclical impact of rainfall and drought events on earnings, allowing Ruralco to capture a greater share of wallet in a higher margin category.

“It represents a significant competitive advantage between us and our peers.

“We’re pleased to have secured a portfolio of high quality businesses aligned with our future farming strategy on attractive acquisition metrics.

Chairman, Rick Lee, said the management team’s acquisitions made a strategic fit with Ruralco’s core business and he was “confident they will deliver value”.  

Ruralco shares went into a trading halt on Wednesday morning as brokers went about finding support for the offer, which will also help pay for a 50pc stake in the Ausure Consolidated Brokers insurance business.

The company is seeking to raise $30m via an institutional share placement at $2.66 a share and another $35m in a one-for-six accelerated entitlement offer also priced at $2.66/share.

The offer is at a 11.5 per cent discount to the five day volume weighted average price of Ruralco shares on the Australian Securities Exchange, which last traded at $3 a share.

Shares are scheduled to resume trading on Friday.

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