FUTURIS Corporation is looking at expanding Elders subsidiary The Australian Agricultural Company (AACo) by possibly merging it with other pastoral aggregations. Speaking at the company's annual general meeting last week, chief executive Alan Newman said, with cattle prices continuing to improve, and the prospect of good trading seasons in the next few years highly likely, the board had undertaken a review to determine the future of AACo. "The board is aware that, at this time, a number of the larger holdings of long-standing rural families and financial institutions are becoming available," he said. "The reasons are varied. They range from succession difficulties and needs for liquidity, to investors looking to take advantage of current strong trading conditions. "The rare opportunities to expand the business via acquisition are likely to continue presenting themselves in the foreseeable future." To facilitate the move, the board will sell down Futuris' interest in AACo, with a view to it being relisted on the Australian Stock Exchange. "As a wholly owned subsidiary, AAco does not have the capacity to materially extend its holdings; nevertheless, the right strategy for the business is to grow," Mr Newman said. Futuris will retain a major interest in AACo through Elders as a major shareholder. To lead the process to a successful conclusion, the board has appointed Peter Holmes a Court as AACo chief executive, and will be holding tenders for the appointment of advisers and bankers to complete the transaction. Mr Holmes a Court is the son of Heytesbury Group head Janet Holmes a Court, who was quick to point out this week that her company's pastoral division, Heytesbury Beef, was not one of the businesses targeted by Futuris. Mr Newman said results for AACo in the 2000 financial year had been outstanding, as indeed were figures for Futuris as a whole, which registered its 11th successive year of profit increase. He said in only 10 years, market capitalisation by Futuris had shifted from $10 million to a high last year of $1.4 billion, before retreating to around $1.1b. Key elements included a jump in sales by 19 per cent, a rise in pre-tax profits of more than 20pc, and an increase in dividends of 10pc. Mr Newman highlighted specific rural achievements such as the granting of a banking licence to Elders, the first granted to a non-bank holding company; the acquisition of BWK of Germany and subsequently the agreement to merge BWK (Australia) with Austops; and building upon the strategic relationship with Incitec. "A part of our growth strategy is acquisition and our entrepreneurial style is often misunderstood and treated as opportunistic investment," Mr Newman told meeting delegates. "However, the major investments we make are all directed to our core business. "For example, Incitec should not be measured as to the value of its investment in stock market terms, but rather by its overall contribution to the group. "Our relationship with Incitec has delivered a 40pc increase in market penetration in fertiliser sales, and increased our brand penetration." Although there was no direct reference to the current battle between Futuris and Wesfarmers Ltd to acquire IAMA, Mr Newman said rationalisation of the rural sector represented a worthwhile opportunity. "The benefits of this rationalisation will flow to our clients and to ourselves, irrespective of who takes the lead role," he said. Mr Newman also announced his appointment by the board as Futuris executive chairman-elect, to replace incumbent William Beischer, who is expected to announce his retirement within the next two years.