Elders has rejected the only offer made for its loss making rural services business.
Tasmanian group Ruralco Holdings’s offer is the only one to have been considered by the Elders board.
Elders said its board considered the offer “inadequate with respect to value, execution risk and other considerations”.
“As a result, the Elders Board has determined to reject it,” Elder said in a statement to the stock exchange this morning.
“Elders continues to have the support of its banking syndicate to consider alternative strategies for Elders Rural Services, including continuing discussions with interested parties and other options for the company such as restructuring and refinancing alternatives.”
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Tasmanian-based Ruralco Holdings Limited (Ruralco) confirmed last week that it had made an offer to Elders Limited to acquire the Elders Rural Services business.
“No agreement has been entered into and there is no certainty that a transaction will complete,” the company said last Friday.
Elders entered a trading halt last week as it considered final bids for its rural services business and Futuris, its auto parts business.
The halt followed advice from competition watchdog the Australian Competition and Consumer Commission that a takeover by Ruralco would get its approval. With Ruralco the only viable bidder, the sticking point would appear to be price.
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In relation to Futuris, a sale will be announced shortly.
“Elders has entered into a short period of exclusive negotiations with one of the three parties that made final binding offers,” the company said today.
“Elders expects that shortly after the conclusion of this period of exclusivity, it will enter into a binding sale contract for the sale of the business.
“All proceeds from any sale will be used to repay debt.”
Ruralco was widely tipped to be successful in its bid after Elders posted another half yearly loss at the end of May.
Elders recorded a statutory loss of $303.2m ($22.8m net loss) for the first half of the year, with the company citing poor weather conditions and depressed livestock markets for the result.
This is compared to the $47.1m statutory profit ($4.4m net profit) that was made in the same period last year.
“The Rural Services business has faced, in common with many of our clients and competitors, sustained hot and dry seasonal conditions across Australia and New Zealand, resulting in reduced demand for farm inputs and depressed sheep and cattle prices,” Elders managing director Malcolm Jackman said in the report.
Elders shares resumed trading this morning and immediately lost 0.5 cents, or 5.56 per cent of their value, to be at 8.5 cents.
However, the broader market was also in the red, with the S&P/ASX200 down 0.4 per cent to 4,808.4 points.
Ruralco’s shares were down nine cents, or 2.65 per cent, to $3.30.
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