23/01/2008 - 22:00

$6m United Farmers sale

23/01/2008 - 22:00

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Western Australia’s third largest fertiliser supplier, United Farmers Cooperative Company, is being sold for an upfront payment of $6 million after tumbling to an $8 million trading loss last financial year, an offer document released by its purchaser has

$6m United Farmers sale

Western Australia’s third largest fertiliser supplier, United Farmers Cooperative Company, is being sold for an upfront payment of $6 million after tumbling to an $8 million trading loss last financial year, an offer document released by its purchaser has disclosed.

The deal also offers the opportunity for current United members to be paid rebates, in the form of extra shares, depending on the tonnages and profit of the WA business after the merger. This deal is likely to be worth about $20 million over four years.

United announced last November that it had entered into discussions with New Zealand’s Ravensdown Fertiliser Cooperative Ltd to finalise a merger of the two groups.

Details of the merger, brokered by Pricewaterhouse Coopers partner Angel Barrio, have been disclosed in a prospectus lodged by Ravensdown.

Ravensdown is offering $6 million worth of shares to its members, and said this was equivalent to the purchase price of the business and assets of United Farmers.

The prospectus also disclosed that United has been trading in the red for the past three years.

It incurred a loss of $7.9 million in the year to August 31 2007, following losses of $3.6 million and $121,000 in the two previous financial years.

Its total revenue was adversely affected by the drought, with sales falling to $94 million last financial year from $137 million and $118 million previously.

United also cut its expenses but not enough to avoid a loss.

The group was unable to pay any rebates to its 3,633 members, who will be asked to approve the Ravensdown deal at a general meeting on February 7.

United has a 15 per cent market share in the WA fertiliser market, behind market leaders Wesfarmers CSBP and Summit.

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