Ridley Expands Reach with $300M Fertiliser Distribution Acquisition
Ridley Corporation has agreed to acquire Dyno Nobel’s fertiliser distribution arm for A$300 million, backed by a $125 million equity raise. This move positions Ridley as a leading diversified agricultural services provider with a new growth pillar.
- Acquisition of Dyno Nobel’s Incitec Pivot Fertilisers Distribution for A$300 million
- Excludes phosphate fertiliser manufacturing and associated remediation costs
- Secured urea supply contract from Perdaman Chemicals starting 2028
- Expected EPS accretion of over 25% by FY26 with $7 million annual synergies
- Funding through $125 million equity raise, new $350 million debt facility, and $50 million vendor notes
Strategic Acquisition Strengthens Ridley’s Market Position
In a significant development for the Australian agricultural sector, Ridley Corporation Limited (ASX: RIC) has entered into a binding agreement to acquire Incitec Pivot Fertilisers Distribution (IPF Distribution), the fertiliser distribution business of Dyno Nobel Limited, for A$300 million on a cash and debt-free basis. This acquisition excludes Dyno Nobel’s phosphate fertiliser manufacturing operations and the associated remediation liabilities, which remain with Dyno Nobel.
The deal marks a strategic expansion for Ridley, which already holds strong positions in animal nutrition products and services. By adding Australia’s largest fertiliser distributor to its portfolio, Ridley is establishing a new growth pillar and reinforcing its status as a diversified agricultural services leader.
Operational and Financial Highlights
IPF Distribution commands an estimated 46% market share on Australia’s East Coast, distributing approximately 2.2 million tonnes of fertiliser annually. The business operates 13 primary distribution centres and several regional service sites, supplying a broad range of products across multiple states without overreliance on any single market.
Ridley has secured a favourable supply contract for at least 700,000 tonnes per annum of urea from the Perdaman Chemicals and Fertilisers plant, expected to commence operations in 2028. This supply agreement is strategically important, offering shorter shipping routes and improved cost terms relative to current arrangements.
Financially, the acquisition is expected to be accretive to earnings per share by more than 25% in FY26 on a pro-forma basis, factoring in estimated synergies of around $7 million annually primarily from back-office consolidations. Pre-synergy accretion is projected at over 18%. Ridley will fund the transaction through a fully underwritten $125 million equity raising, a new $350 million revolving debt facility, and the issuance of $50 million in vendor notes to Dyno Nobel.
Strategic Rationale and Future Outlook
Ridley’s leadership highlights the complementary nature of the acquisition, emphasizing shared competencies in commodity risk management and logistics, as well as strong customer relationships. The combination is expected to unlock growth opportunities by bringing focused investment and leveraging complementary capabilities across the combined entity.
While the phosphate fertiliser manufacturing operations at Phosphate Hill and Geelong are excluded from the deal and subject to Dyno Nobel’s ongoing strategic review, Ridley is confident in sourcing required products globally if closures occur, though with some earnings impact. The Geelong manufacturing site is expected to close by December 2025, with material financial implications anticipated.
Completion of the acquisition is targeted for the third quarter of 2025, subject to conditions including Dyno Nobel’s internal restructuring and finalisation of the Perdaman offtake agreement. The transaction is supported by Ridley’s largest shareholder, AGR Agricultural Investments LLC, which has committed to fully participate in the equity raising.
Bottom Line?
Ridley’s acquisition sets the stage for a stronger, more diversified agricultural services platform, but integration and market dynamics will be key to watch.
Questions in the middle?
- How will Ridley manage the transition and integration of IPF Distribution post-acquisition?
- What are the potential financial impacts if Dyno Nobel’s phosphate manufacturing operations close as part of their strategic review?
- How will the Perdaman urea supply contract influence Ridley’s cost structure and competitive positioning from 2028 onwards?
