埃尔德斯（ELD）：澳大利亚竞争与消费者委员会的担忧-我们仍然相信

Australia | Engineering & ConstructionElders ACCC Concerns — We Still Believe ACCC released a Statement of Issues on 29 May concerning ELD'sproposed Delta acq. detailing its concerns, mainly around lessening ofcompet. in some local markets but also at regional, state & national level.“ELD & Delta, via their store networks, are significant retail suppliers of ruralmerch. in Aust,” the ACCC said. We're not surprised by this, but believe onbalance that the acq. will ultimately be permitted after divestments. ACCC Statement of Issues (29 May):“The ACCC has outlined its preliminary competitionconcerns with Elders’ proposed acquisition of Delta Agribusiness in a Statement of Issuespublished today. 'Competition in the supply of rural merchandise is critical to Australian farmers and our globalcompetitiveness in agricultural products', ACCC Deputy Chair Mick Keogh said. 'We havepreliminary concerns that the proposed acquisition may lead to higher prices or reduced qualityin the supply of rural merchandise without an independent Delta competing with ELD followingthis proposed acquisition.' 'The ACCC is concerned that the proposed acquisition may reduce competition in the retailsupply of rural merchandise in various local markets, and at a broader regional, state or nationallevel. ELD and Delta, through their store networks, are both significant retail suppliers of ruralmerchandise in Aust', Mr Keogh said. 'A key issue we are testing is the extent to which having achain of retail stores assists Delta to compete with ELD more effectively than smaller retailers,both in individual local markets, and across a broader geographic area', Mr Keogh said. The ACCC is also considering whether the proposed acquisition would reduce competitionat the wholesale level in WA, or whether alternative suppliers would be able to compete withElders effectively, should it acquire Delta.” JEF Analysis:We estimate there are ~1,500 rural merchandise stores in Aust. We estimateELD's share is 16% (company stores) and Delta 5%. The combined group would have 21%share. This compares to Nutrien with 24% (company stores). Both ELD and Nutrien also havelarge wholesale businesses, with ELD supplying product to ~300 AIRR independent membersand Nutrien to ~350 CRT/LMK independent members. Whilst we view these member storesas genuinely independent to both ELD and Nutrien, we assume the ACCC's analysis will alsoconsider the level of wholesale business that ELD has in each market. In this regard, at thetime of the Nutrien/Ruralco merger, the ACCC said, “the ACCC considers that a wholesaler hasa degree of influence over the business of an independent store that it supplies.” John Campbell * | Equity Analyst+61 439052387 | jcampbell1@jefferies.comTom Chapman * | Equity Analyst+61 438499671 | tom.chapman@jefferies.comWei Sim * | Equity Analyst+61 477773438 | wei.sim@jefferies.comJennifer Xu * | Equity Associate+61 293642894 | jennifer.xu@jefferies.com When Nutrien announced the acquisition of Ruralco in Feb 2019, the ACCC similarly issueda Statement of Issues with concerns around lessening of competition in both local markets(there were 7 local markets of concern) and regional/state/national. The ACCC identified4 additional local markets where a Nutrien member store competed with a Ruralco store.Ultimately, in Aug 2019, the ACCC decided not to oppose the merger, subject to an undertakingrequiring Nutrien to divest 3 stores in Broome (WA), Alice Springs (NT) and Hughenden (Qld),to a purchaser approved by the ACCC. JEF Comment:Whilst we acknowledge that this merger could lead to some lessening ofcompetition in some markets, we also believe that forced divestments could effectivelyaddress such concerns. Further, allowing ELD to build scale via M&A could see ELD competingmore effectively with Nutrien which has significant global fertilizer manufacturing capabilitiesgiving it a competitive advantage over ELD. This could actually benefit farmers. Ultimately, we believe this merger will be permitted subject to various divestments. Company Description Elders Elders Ltd. is engaged in providing financial, real estate services to rural, agricultural and automotive businesses. The firm operates its businessthrough the following segments: Branch Network, Wholesale Products, Feed and Processing Services, and Corporate Services and Other. TheBranch Network segment includes the provision of a range of agricultural products and services through a common distribution channel. TheWholesale Products segment comprises the AIRR business based in Shepparton, Victoria, supported by a network of eight warehouses to supplyindependent retail stores throughout Australia. The Feed and Processing Services segment focuses on Killara feedlot, a beef cattle feedlotnear Tamworth in New South Wales. The Corporate Services and Other segment provides general investment activities not associated with theother business segments and the administrative corporate office activities. The