Elders shares soar as they resume trading
Elders shares have soared to a six-month high after the company emerged from a trading halt having raised $100 million to fund its acquisition of wholesale buying group Australian Independent Rural Retailers.
Elders said on Wednesday it had completed an institutional placement of $40 million and an institutional entitlement offer of $60 million.
Under the institutional entitlement offer, for every 6.7 shares that institutions held they were eligible to buy one new share for $5.55 - a 9.5 per cent discount to Elders' share price of $6.055 when it entered the trading halt on Monday.
Elders said about 92 per cent of eligible institutional investors took it up on the offer, and chief executive Mark Allison said the company was "pleased with the strong support"
Another entitlement offer for retail investors under the same terms opens on Monday, and is expected to raise about $37 million.
At 1249 AEST Elders shares were up 14.8 per cent to $6.95, their highest level since January.
Elders is raising the money to acquire AIRR in a cash and scrip transaction that values the company at $187 million, not including its $30 million in debt.
AIRR is a wholesaler with eight warehouses that supplies agricultural chemicals and animal products to 340 independent rural merchandise, pet and produce stores.
Mr Allison said the acquisition would give Elders "a national wholesale platform of scale" and Elders says it has the potential to deliver net synergies of about $8 million a year.
AIRR will be kept as a standalone business and Elders will be able to use hundreds of millions in accumulated tax losses that it has carried forward for years to offset AIRR's expected earnings of $21.9 million for the 12 months to September.
Elders had $213.5 million in unused tax losses available to offset corporate profit in future years, according to its 2018 annual report.
The tax losses mean Elders has paid minimal corporate taxes in recent years but the company noted in its 2018 tax transparency report it has paid GST and employment taxes on its 2000 employees.