The competition watchdog has given the green light to a potential takeover of agribusiness Elders by its rival Ruralco.

Debt-laden Elders has been looking to sell its agricultural products business since 2012.

Ruralco has expressed an interest in the business, but is yet to finalise a takeover proposal.

Both sell fertiliser, chemicals, farm materials and animal health products.

The Australian Competition and Consumer Commission (ACCC) on Thursday said it would not oppose a takeover of Elders by Ruralco if a formal proposal is made.

A combined Ruralco and Elders agricultural products business would still face competition from other retailers, ACCC chairman Rod Sims said.

“The ACCC considered that in most towns with both a Ruralco and Elders retail store, the combined rural services retail networks of the merger parties would be constrained by alternative retail suppliers of agri-products located nearby,” Mr Sims said in a statement.

Ruralco has previously said it would update the market on its potential takeover of Elders once the ACCC’s review was completed.