FARM services giant Landmark has consolidated its position as Australia’s biggest wool broker with the purchase of the Arcadian Wool business this month.
And the company is looking to make still more acquisitions in the wool brokering sector.
Landmark south east region director Robert Clayton said the share buy-out took the company’s stake in Arcadian from about 50 percent to 100pc in a deal completed on August 1.
With the addition of Arcadian’s throughput – about 36,000 bales last year — the acquisition will boost the number of bales to be sold by Landmark in Victoria to about 240,000. About 1.8 million bales of wool are sold in Australia annually.
Landmark and its other wool brands – TWG Wool and Dalgety Wool — auctioned more than 400,000 bales last year, Mr Clayton said.
“We would be the number one (broker) in Australia.”
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Mr Clayton said the acquisition brought synergies for Landmark’s wool handling, documentation and processing, especially through Melbourne, the company’s major selling centre. All Arcadian staff will retain their positions and Arcadian Wool clients will be able to continue to sell their wool through the company.
“AWH were doing their (Arcadian’s) re-handle and that will be the only difference, we will do our own re-handle as we do with our wider Landmark clip,” Mr Clayton said.
Landmark is owned by the Canadian-based agricultural services and product company Agrium Inc, but Mr Clayton said Landmark was not looking to “move up” the wool value chain at the moment.
“We are open to all options; obviously we are a corporate business and we are blessed to have the backing of Agrium from a balance sheet point of view, so we do have the capability to step into the supply chain.
“But what we are probably more looking at now are more acquisitions,” he said.
“We are looking to build on our scale – so other brokers that are out there or individual wool gathers, we would certainly be interested in talking to – acquisition is a big part of our growth plan.”
“The immediate aim is efficiencies in scale — once you start processing wool, it is like any other factory, there is a fixed cost and the more bales you can put through the lower the per bale cost is.”
Mr Clayton said with more market share Landmark’s wool marketing options broaden, including looking at how the wool is sold and strategic partnerships with end-users.
“You’ve got to have scale to do that and you’ve got to have certainty of supply.
“Scale gives you a large enough volume of wool that you can supply the right quality of wool when it is required, not run out of supply when the end-user needs it the most,” he said.
“Our ultimate aim at Landmark is to make our growers as profitable as possible and to share in that value-chain.
“Our focus is always on the grower and it is always on maximising value for the grower, but we are a corporate organisation that obviously has to return value to our shareholders as well.”
On the media speculation that the Lempriere Group was considering buying the Landmark business from Agrium, Mr Clayton said there were no discussions with “anyone” to purchase the company.
“I can confirm there have been no discussions at all around a sale of Landmark.
“All the discussions are around how we grow Landmark, not how we divest Landmark.”
Business as usual for Arcadian staff and clients
Arcadian Wool managing director Ian Shawcross said the agreement by the company’s eight employee shareholders to sell their shares to Landmark occurred over the last 12 months.
“It all went through on August 1,” he said.
“The business that Arcadian held will continue as we’ve done for 31 years, under the same trading name with the same people employed.”
Mr Shawcross said the Landmark deal was a good result for Arcadian clients because the industry is shrinking.
“It just gives a bit of certainty for the future; we can go ahead and employ new staff without any problems.
“Some of the staff were getting to the stage where they needed to retire so replacements needed to be made,” he said.
“I’m happy with the result of the sale, as are all the shareholders, because it was a joint decision.”