Both Elders and Ruralco deny any likelihood of a takeover attempt following a surprise announcement by Ruralco on Friday that it had secured 10.1 percent of Elders stock, in a move described as a ‘strategic investment.’

“This is a strategic investment and there is no current intention to make a takeover offer for Elders,” Ruralco managing director John Maher said in a statement. The broader market, however, remains unconvinced.

“Elders is a major Australian agribusiness with a national network and a well-recognised brand. The investment in Elders is part of Ruralco’s strategy to strengthen its participation in the agribusiness sector and hopefully ensure that we have an opportunity to play a role in shaping its future structure,” Mr Maher said.

The announcement sparked an immediate 4c rise in Elders shares on Friday, up 21 percent to 22.5c. Ruralco also traded higher, closing last week at $3.24.

“Whilst this is a key strategic investment for Ruralco, our focus remains clearly on the continued strong performance of our existing operations. It is business as usual for our people and customers,” Mr Maher said.

Ruralco reported a 24pc rise in profit for the year ended September 30 2011, with a 12pc increase in dividends. Since 2005 Ruralco has had a compound annual growth rate in EBIT of 40pc.

Elders last week reported a profit of $40.5 million for the first half of 2012 to 31 March, up from a loss of $14.6m reported for the 2011 first half.

The profit included one-off items totalling $34.4m from the company’s recent successful objection to the ATO’s Amended Tax Assessment, offset by other non-recurring items.

Underlying performance exclusive of these items was described as ‘solid’ by chief executive Malcolm Jackman.

“Rural Services results for the first half are solid given the circumstances. Trading activities, particularly our live export operations were the highlight,” he said.

Mr Jackman said the benefits of a strong rebound in the contribution from trading operations had been more than offset by lower first-half activity levels in Elders’ agency markets in livestock, wool and real estate.

“Network results were consistent with what would be expected given the deferral of activity and sales brought by flooding and falling fertiliser and AgChem prices. Notwithstanding this, our Farm Supplies sales and income continued to grow year-on-year,” he said.

Mr Jackman said the good rainfall in the six months to March had provided a good basis for the second half.

“We have entered our peak Rural Services sales period with relatively good conditions and soil moisture, although rainfall since March has been below season’s averages in many regions,” he said.

While livestock agency is expected to continue to be challenging, the company expected live export income to continue above 2011 levels based on execution of current orders.