Elders Limited has secured regulatory approval to acquire Delta Agribusiness, subject to divesting six Western Australian branches, while maintaining a positive outlook for FY25 earnings.
- ACCC approves Elders' acquisition of Delta with conditions
- Six Delta branches in Western Australia to be divested
- Delta's FY25 impacted by dry conditions and competitive pricing
- Elders forecasts FY25 underlying EBIT between $142m and $146m
- Full FY25 results due 17 November 2025
Regulatory Clearance and Divestment Conditions
Elders Limited has received a green light from the Australian Competition and Consumer Commission (ACCC) to proceed with its acquisition of Delta Agribusiness, a significant move in the Australian agribusiness sector. The approval, however, comes with a stipulation – Elders must divest six Delta branches located in Western Australia, specifically in Dalwallinu, Kalannie, Albany, Manypeaks, Wellstead, and Hyden. These branches collectively contributed less than $300,000 in underlying EBIT for the financial year ending June 2025, indicating a relatively modest impact on the overall business.
Strategic Implications of the Acquisition
Mark Allison, Elders’ Managing Director and CEO, expressed satisfaction with the ACCC’s decision, emphasizing the company’s commitment to leveraging the combined strengths and local expertise of both Elders and Delta. He reiterated that the acquisition is expected to enhance service offerings and solutions for farmers, without diminishing competition in rural merchandise markets. The divestment of the six branches appears to be a measured concession to regulatory concerns, allowing the broader acquisition to proceed while maintaining competitive balance in the affected regions.
Trading Update and Market Conditions
Delta’s financial performance for FY25 was challenged by dry conditions across southern Australia and a delayed cropping season, which dampened retail sales. Additionally, competitive pricing pressures emerged as crop protection traders sought to avoid inventory carry-over, squeezing margins. Elders reported similar headwinds in its retail operations, particularly in South Australia and Western Victoria, where drought conditions persisted through much of the year. Encouragingly, improved rainfall and conditions from June onwards have driven increased demand for crop protection products in the final quarter, partially offsetting earlier setbacks.
Financial Outlook and Upcoming Results
Despite these challenges, Elders projects an underlying EBIT for FY25 in the range of $142 million to $146 million, reflecting resilience and steady growth from the prior year. The company anticipates improved leverage compared to the previous period, though still shy of its target, alongside cash conversion rates expected to exceed goals. These preliminary and unaudited figures suggest Elders is navigating a complex environment with cautious optimism. Investors will be keenly awaiting the full FY25 financial results, scheduled for release on 17 November 2025, to gain clearer insight into the acquisition’s impact and the company’s broader performance trajectory.
Bottom Line?
Elders’ acquisition of Delta marks a pivotal step in agribusiness consolidation, but the true test will be how effectively it integrates operations post-divestment amid challenging market conditions.
Questions in the middle?
- How will the divestment of six branches affect Elders’ market share and competitive positioning in Western Australia?
- Can Elders fully realise synergies from the Delta acquisition given the ongoing dry conditions and pricing pressures?
- What strategic moves will Elders pursue to meet its leverage and cash conversion targets in FY26?