RURALCO'S future options for its network of farm services branches are being kept under wraps amid its high profile bid to merge with Elders' 173-year-old agency business.
The rural service sector's rising star player has offered to save Elders from weighty debt and cash flow woes by merging both companies to create a $500 million-plus joint venture.
But despite a flurry of share market speculation the plucky Ruralco Holdings merger bid became a standoff this week after Elders bosses said they did not have enough detail to evaluate any such concept.
Elders' battered share price rebounded slightly late last week to peak around 27 cents when Ruralco revealed that last month it offered to discuss merger options and the prospect of splitting Elders' Futuris automotive components and forestry assets into a separate business.
The merged rural services businesses of both companies would be owned by both Elders and Ruralco shareholders.
Ruralco is already Elders' biggest shareholder thanks to a steady series of share acquisitions since summer which now give it about 12.5 per cent of the share register
Ruralco managing director John Maher confirmed this week that his company's aim continued to centre on insuring Elders was protected from falling prey to an overseas takeover bid.
But he said while an offshore buyer would not be in the national interest, highly geared Elders' current business structure was "unsustainable" and "going backwards" and if Elders' directors did not want to engage in friendly talks, Ruralco would consider withdrawing its investment.
Although Ruralco released broad details of its plan to the Australian Securities Exchange (ASX) late last week, Mr Maher said it was too soon to speculate on how a merged entity would operate.
Ruralco's network of stock and station agencies and farm input businesses - many part owned by local operators - has expanded significantly in the past seven years.
Its footprint now rivals much of Elders' national network of 230 core branches and about and 225 real estate franchises.
Mr Maher said Elders was "obviously a valuable brand" in rural Australia but decisions on how the two company networks might continue to operate, or what attrition may be expected under a streamlined management arrangement could not be discussed yet.
"Those would be discussions we would have to have," Mr Maher said.
"At the end of the day the other party would need to be involved in making those decisions.
"The issue for now is that we have a proposal that is very fulsome in flavour, with an idea that is very clear, and its up to Elders to respond.
"The ball's in their court."
But Elders chief executive Malcolm Jackman said no formal proposal had come from Ruralco, only a short confidential letter "regarding the potential for a transaction opportunity".
He believed Ruralco's approach underscored that Elders was on the right track with its "pure play" rural services business plan to focus on its core network and trading business.
"Elders advised Ruralco that if it provided a sufficiently detailed proposal, the board would evaluate it and Elders has heard nothing from Ruralco since that time."
Although Mr Maher believed Ruralco could help Elders get back on its feet by helping to pay off its $370m debt which he said was "soaking up its working capital", Elders has so far continued to staunchly defending its current business course.
"Elders remains fully committed to the execution of that strategy and continues to believe it has the capacity to create significant value for shareholders over time," Mr Jackman said.
WHAT RURALCO PROPOSED
Elders automotive business any residual forestry assets be separated out to be held by current Elders shareholders and eventually sold in an orderly manner
The rural services business of Elders merge with Ruralco and be owned by both Elders and Ruralco shareholders
A sustainable equity raising would be undertaken in the merged business to restore debt to sustainable levels
Elders hybrid shares would agree to be redeemed at a discount
to face value, but at a modest premium to current market prices