Curtain rises on Wesfarmers Landmark

23 Mar, 2001 01:33 PM
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AFTER more than a century, the name of Dalgety will start to disappear from the Australian agribusiness scene.

From this week, Wesfarmers Landmark becomes the new brand name for the business created by the recent merger of Wesfarmers Dalgety and IAMA.

The decision on the new trading name for the merged agribusiness giant, announced by Wesfarmers Landmark managing director Richard Goyder (pictured right), during an address to a cropping seminar at Katanning on Tuesday, puts an end to weeks of speculation.

It also marks the kick-off of a solid promotional campaign by Wesfarmers Landmark aimed at establishing the identity of the new agribusiness entity in a marketplace with a long history of digesting corporate mergers, takeovers and name changes.

Mr Goyder said the merger brought together the experience and breadth of experience of the two former companies, plus the financial strength of the parent company, Wesfarmers Ltd.

The merged entity became a foregone conclusion on February 9 this year when shareholders of the poorly-performing IAMA accepted a recommendation from their directors to accept the Wesfarmers offer of a reverse takeover and share buy-out.

Under the merger agreement, IAMA was to acquire Wesfarmers Dalgety ‹ the rural services arm of Wesfarmers Ltd ‹ in return for a share issue by IAMA sufficient to give Wesfarmers a controlling interest in the merged company.

Existing IAMA shareholders were offered an "exit opportunity" enabling them to sell their shares to Wesfarmers for a cash price of $1.65. More than 90 per cent of IAMA shareholders accepted this offer, allowing Wesfarmers to proceed to a compulsory acquisition of the remainder.

The merger creates a broad-based rural agency and inputs supply giant with potential merchandise sales exceeding $1.5 billion and an inputs supply market share of well over 30 per cent.

Explaining the reasons for the choice of brand name for the merged group, Mr Goyder said "Wesfarmers Landmark" had been picked for two reasons.

"First, because the merger is a landmark event in the history of the rural services business in Australia; second, because a landmark is a conspicuous and recognised feature of the landscape," he said.

"Wesfarmers Landmark, with its representation in more than 400 rural and regional centres, will be a significant economic entity across the country. With more than 2300 staff, plus affiliate members, agents and their staff, Wesfarmers Landmark will also be an integral part of the communities in which they live."

He said the obvious alternative of calling the merged company "Wesfarmers Dalgety IAMA" had been rejected on the basis it had connotations of "bigness", while opting for simply "Wesfarmers" would have led to confusion because of the company's other sectoral interests.

But market research among company staff and clients had revealed strong support for "Wesfarmers" remaining in the future name because of the group's financial strength and record for performance.

"Dalgety has certainly been a force over the years but people haven't forgotten that the company was in all sorts of strife in the early 1990s, and it was only Wesfarmers coming along with $78 million that saved the day."

Mr Goyder said the merger between Wesfarmers Dalgety and IAMA had resulted in a more evenly balanced marketplace than if rival suitor Futuris Ltd (the parent company of rural services group, Elders) had ended up controlling IAMA.

(Futuris owned just under 20pc of IAMA at the time of the Wesfarmers merger bid and had earlier tried to obstruct the merger through the courts, but in the end decided to drop its legal action and accept the Wesfarmers share offer.)

It also ensured ownership of the important rural services industry would remain in Australian hands.

Mr Goyder said if the merged company performed as he hoped, Wesfarmers Landmark could within a few years be accounting for 20pc or even 25pc of the parent company's earnings, putting it on a par with the group's energy division, second only to hardware in profit contribution.

At present rural business generates just over 10pc of Wesfarmers' group profit.

The merger will also mean a 2.5 to three-fold expansion of Wesfarmers Dalgety's existing farm inputs supply business, thus significantly increasing the contribution of this sector to gross profit relative to the more traditional livestock and wool sectors.

But Mr Goyder says the wool and livestock divisions remain critically important to the company's future, and in fact have been the driving force behind the company's latest improved results.

Among other things, the merger has made Wesfarmers Landmark the nation's largest private employer of agronomists, with more than 250 now attached to the company's branches.

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