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In a move to grow its independent retail presence, agribusiness giant Elders (ASX: ELD) has entered an agreement to buy Australian Independent Rural Retailers (AIRR).
Elders will buy AIRR for a cash-scrip consideration of $10.85 per share, valuing the rural merchandise, pet and produce chain at $157 million on an equity basis.
AIRR's best known brand is Tuckers Pet & Produce which provides goods for the equine, livestock and companion animal markets.
AIRR is also behind agricultural chemical company Apparent and animal health product business Independents Own.
Combined, the AIRR network comprises of 240 independent member stores plus 100 Tuckers Pet & Produce stores nationwide.
Elders managing director and CEO Mark Allison says acquiring AIRR will give the company a national wholesale platform.
"By preserving continuity of AIRR's key management team and independent identity through a light touch integration, AIRR will continue to deliver the benefits to its independent members which have enabled it to achieve a track record of consistent growth," says Allison.
AIRR was established in 2006 and has since gone from strength to strength.
The company is likely to be a quick-performing asset for Elders and is tipped to generate an EBITDA of $21.9 million before the end of September.
The acquisition will be funded via a $137 million equity raising launched today and fully underwritten by Macquarie Capital.
Elders will issue $79 million in new shares to AIRR stakeholders as part of the scrip consideration.
ELD stock is trading at $6.13 at the time of writing (11:10am AEST).
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