Ridley Corporation is set to acquire Dyno Nobel’s fertiliser distribution arm for A$300 million, marking a strategic expansion into fertiliser services backed by a $125 million equity raise. The deal is expected to significantly enhance Ridley’s earnings and market footprint by FY26.
- Acquisition of Dyno Nobel’s IPF Distribution for A$300 million
- Excludes phosphate fertiliser manufacturing and remediation liabilities
- Secured urea supply contract from Perdaman plant starting 2028
- Deal expected to be over 25% EPS accretive in FY26 pre-synergies
- Funding via $125 million equity raise, $350 million debt facility, and $50 million vendor notes
Strategic Acquisition to Broaden Ridley’s Agricultural Services
Ridley Corporation Limited has announced a binding agreement to acquire Dyno Nobel Limited’s fertiliser distribution business, IPF Distribution, for A$300 million on a cash and debt-free basis. This move marks a significant expansion for Ridley, traditionally known for its animal nutrition products, by adding Australia’s leading fertiliser distributor to its portfolio.
The acquisition notably excludes Dyno Nobel’s phosphate fertiliser manufacturing operations and the associated remediation costs of sites such as Phosphate Hill and Geelong. These manufacturing assets remain with Dyno Nobel, reflecting a clear strategic focus by Ridley on distribution rather than production.
Market Position and Operational Scale
IPF Distribution holds approximately 46% market share on Australia’s East Coast, distributing around 2.2 million tonnes of fertiliser products annually. Its extensive network includes 13 primary distribution centres and multiple regional service sites, providing a competitive edge through scale and strategic location. Ridley aims to leverage this footprint alongside its existing commodity management and logistics expertise to enhance service offerings and customer relationships.
Importantly, Ridley has secured a 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 contract promises favourable terms and a shorter shipping route, strengthening Ridley’s supply chain security.
Financial Impact and Funding Structure
The acquisition is projected to be over 25% accretive to Ridley’s earnings per share in the 2026 financial year before synergies, with estimated annual synergies of $7 million primarily from back-office consolidations. Ridley plans to fund the transaction through a combination of a fully underwritten $125 million equity raise, a new $350 million revolving debt facility replacing its existing $150 million facility, and $50 million in vendor notes issued to Dyno Nobel.
AGR Agricultural Investments LLC, Ridley’s largest shareholder with a 19.4% stake, has expressed strong support and committed to fully participate in the equity raising. The funding structure is designed to maintain a manageable pro-forma leverage ratio of approximately 1.3 times net debt to EBITDA by June 2025, excluding vendor notes.
Outlook and Strategic Rationale
Ridley’s leadership highlights the acquisition as a transformational step, establishing a new growth pillar in fertiliser distribution and reinforcing its position as a diversified agricultural services provider. The deal builds on Ridley’s existing strengths and customer base, with management confident in the opportunity to enhance IPF Distribution’s market position through focused investment and operational improvements.
While the phosphate manufacturing operations excluded from the deal are under strategic review by Dyno Nobel, any potential closures are not expected before September 2026. Ridley has contingency plans to source required products globally if needed, though this could impact earnings modestly.
Bottom Line?
Ridley’s acquisition of IPF Distribution signals a bold diversification into fertiliser distribution, setting the stage for accelerated growth and market leadership in Australian agriculture.
Questions in the middle?
- How will Ridley integrate IPF Distribution’s operations without disrupting existing customer relationships?
- What are the potential financial impacts if Dyno Nobel’s phosphate manufacturing operations close earlier than expected?
- How will the Perdaman urea supply contract terms evolve as the plant approaches commissioning in 2028?