Information Packs Mailed To Shareholders
Wednesday, 7 September 2005
Information Packs Mailed To Shareholders
What will be the nation’s largest rural servicing firm PGG Wrightson is projecting a post-merger inaugural net profit after tax of $30 million (after goodwill amortisation of $9 million), on a turnover of $912 million.
The projections, based on the inclusion of 12 months earnings from Pyne Gould Guinness and nine months’ from Wrightson, are from the Investment Statement and Prospectus contained in separate information packs being mailed to each company’s shareholders. The mailout to Wrightson shareholders is occurring today, and that to PGG shareholders on Friday 9 September.
Also in the packs are details of the final steps required to bring the billion dollar company into being.
Shareholders of PGG and Wrightson are being urged to support the merger by the directors of both companies, who have unanimously recommended the proposal. The merger has been cleared by the Commerce Commission and endorsed by the independent advisers, who say it will create value for shareholders of each company.
PGG Wrightson Chairman-elect Bill Baylis said the independent advisers (Grant Samuel & Co and Ferrier Hodgson & Co) confirmed the directors’ view that the merger makes sound business sense.
“The mission of PGG Wrightson will be to deliver to our clients a comprehensive range of high-quality services and products that will add to value to their businesses,” he said. “PGG Wrightson will be in a unique position, having the scale and resources to assist New Zealand farmers to retain their position as world leaders against increasing competition.
“The merger will be good for our clients and beneficial to shareholders, and will provide more career opportunities for staff.”
On an annualised basis the combined company is projected to have revenue and assets of approximately $1.1 billion in each case, and shareholder equity of $400 million. Synergies are projected at $20 million per year before tax, making a significant contribution to earnings from the second year of the merger.
The information packs contain:
- Notice of special shareholders meetings to approve the merger (Wrightson shareholders will meet in Auckland on 21 September 2005 and PGG shareholders in Dunedin on 23 September 2005.)
- A letter from the chairman of each company to respective shareholders
- An Explanatory Memorandum detailing the background to the proposal
- (For Wrightson shareholders) an Investment Statement and Prospectus for the issue of PGG Wrightson shares to Wrightson shareholders.
- A proxy form / voting form
- An independent adviser’s report (Grant Samuel & Co for PGG; Ferrier Hodgson & Co for Wrightson)
The merger requires:
- Approval by 75 per cent of shareholders who vote at meetings of each company in accordance with the conditions set by the High Court.
- Approval by the trustee and the redeemable preference shareholders of RPI Securities Limited to accept PGG Wrightson shares as security in lieu of Wrightson shares.
- Final approval by the High Court, provisionally scheduled for 4 October 2005.
The merger has:
- The unanimous support of the directors of PGG and Wrightson
- The support of Pyne Gould Corporation, which holds 55.4 per cent of the voting shares of Pyne Gould Guinness
- The support of Rural Portfolio Investments, which holds 50.01 per cent of the voting shares of Wrightson
- A recommendation to PGG shareholders from independent adviser Grant Samuel that the merger proposal is fair and reasonable
- A recommendation to Wrightson shareholders from independent adviser Ferrier Hodgson that the merger proposal is fair and reasonable.
PGC and RPI have entered into a shareholders agreement which provides for:
- Support for the vision, objectives and values of PGG Wrightson
- Co-operation on the appointment of directors, management and corporate governance to achieve the goals of the merger
- A standstill on changes in shareholdings for three years
- Pre-emptive rights should either party decide to sell any shares
- PGC will initially hold 22 per cent of PGG Wrightson and RPI 30 per cent of the shares.
Key facts – PGG Wrightson will have:
- Leading positions in New Zealand in – Livestock, Finance, Seeds, Rural Supplies, Wool, Insurance, Real Estate, Irrigation, Animal Nutrition and Agricultural Training
- Operations in Australia and South America
- A board of 12 directors chaired by Bill Baylis. Six directors nominated by PGG and six by Wrightson
- Interim Managing Director Baird McConnon, pending completion of an internal and external search for the chief executive
The last day for the trading of Wrightson shares on the NZ Stock Exchange will be 3 October 2005. PGG Wrightson shares are expected to begin trading, under the code PGW, on 7 October 2005.