Agribusiness

Agribusiness: Elders to exit NZ interests

Jon Condon, 26/06/2014

elders-signElders (Australia) will exit its New Zealand agri-service business, following an agreement to sell its 50 percent share in Elders Rural Services (NZ) to diversified local agribusiness, Carr Group.

The deal is expected to be completed by the end of next month.

The Carr family is buying both the 50pc share in Elders NZ held by Elders Ltd in Australia, and the balance owned by Elders NZ managing director Stu Chapman and business partner Eric Spencer.

The price was not disclosed.

The combined businesses will have annual revenue of more than $300 million and more than 400 staff across New Zealand. The Elders NZ business was put up for sale a few months ago by Elders Australia as it worked through its debt issues.

Elders NZ will use the Carr contacts to expand its livestock business in the South Island and expects to boost its seed sales business through new links with Carr’s international business in the same sector.

Carr’s Canterbury Seed Co exports a range of pasture and crop seed to more than 40 countries, and produces seed overseas to export to other markets.

Stu Chapman will remain in charge of the stand-alone Elders business.

The North Island livestock business was strong, but there were weaknesses in the south, which would be worked on, he said.

“We’re happy to be back to 100 percent NZ ownership, and we know that is an extremely strong sentiment among farmers as well. There’s a lot of talk about it in the field,” Mr Chapman said.

Carr Group managing director Craig Carr said the company had a range of businesses in the sector but the family members were farmers at heart. They were involved in mixed farming and dairying, bringing the first robotic dairy milking machines to NZ about seven years ago and owned the agency for the Lely robotic system, he said.

Innovation had been at the heart of the family’s business development.

“We run our farms as professional units and we know what they make every month. When our businesses are selling to farmers and buying from farmers we know the challenges they’re facing.”

He welcomed the opportunity to add the livestock and wool businesses to group activities and the idea of working with the Primary Wool Co-operative in the Elders Primary Wool (EPW) joint venture.

Craig Carr will spend the next few weeks getting to know the Elders staff so the acquired business can hit the ground running on August 1.

“We’re really excited and quite proud to be doing this – a private, family business servicing the wider NZ agri sector,” Mr Carr said.

The shareholder loan to Elders NZ from Elders Australia would be replaced by new funding, Mr Chapman said.

He expects the new balance sheet to provide a solid platform for growth.

Elders NZ had revenue of $105m in the September 2013 year, made an after-tax profit of $2.1m, and will bring about 250 staff into the Carr Group.

Though Carr Group had been a seller of some investments in the recent past, that was not the intention with Elders, which he saw as a “legacy asset”.

The group’s relationships with many farmers in Canterbury would help Elders lift its livestock business profile, he said.

Mr Chapman said there had been strong trading for the EPW Just Wool carpet business in North America over the past few months, with a launch in Australia in the past week and plans for the domestic market later in the year.

 

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