One of the best performers on the ASX on Wednesday was the Ruralco Holdings Ltd (ASX: RHL) share price.
The agribusiness company's shares returned from a trading halt with a bang and surged a massive 47% higher to hit a multi-year high of $4.50, before ending the day 45% higher at $4.46.
Why did Ruralco's shares rocket higher on Wednesday?
Ruralco requested a trading halt on Tuesday pending an announcement by the company in relation to a material transaction. It turns out that Ruralco isn't the company doing the buying, but is in fact the company being targeted.
According to yesterday's release, it has entered into a Scheme Implementation Deed with Nutrien Ltd under which Nutrien has agreed to acquire 100% of the issued share capital of Ruralco for a cash price of $4.40 per share by way of a scheme of arrangement.
A fully franked special dividend of up to 90 cents per share in cash is expected to be declared shortly before the implementation of the Scheme. This will reduce the cash offer by the same amount. A further interim dividend of ~10 cents per share is also expected to be declared but won't impact the offer price.
The directors of Ruralco have unanimously recommended that shareholders vote in favour of the Scheme, in the absence of a superior proposal and subject to an independent expert's report concluding that the Scheme is in the best interests of Ruralco shareholders.
Nutrien is the world's largest provider of crop inputs and services. As it is based in Canada, the Scheme is subject to certain conditions, including approval from the Australian Competition and Consumer Commission and the Foreign Investment Review Board.
Ruralco's chairman, Rick Lee, believes the proposed transaction represents compelling value for shareholders and expects it to create a robust rural services provider which will provide significant benefits for farmers, businesses, and communities across regional and rural Australia.
Mr Lee said: "There is strong logic in bringing together the trusted businesses of Ruralco and Nutrien's Australian subsidiary Landmark to capture synergies, efficiencies and cost savings in our highly competitive rural markets. This will benefit both our farmer customers and their communities."
What now?
I was a big fan of Ruralco and felt it was a great option for income investors. But with its shares rocketing higher and trading close to the offer price, investors may want to focus on other options now.
If you want exposure to rural assets then Rural Funds Group (ASX: RFF) could be a top pick for investors. Alternatively, National Storage REIT (ASX: NSR) is another quality option for income seekers.
