Agria teams with China’s New Hope to take control of PGG Wrightson
By Jonathan Underhill
Dec. 24 (BusinessWire) – China-based Agria Corp. and New Hope Group have teamed up to seek control of PGG Wrightson, New Zealand’s biggest rural services company, in a $141 million partial takeover.
New Hope, one of China’s largest agricultural and food corporations, is to become a shareholder in Agria (Singapore), the unit of Agria Corp. that currently owns 19% of Wrightson.
Agria (Singapore) will offer 60 cents a share for 235 million shares of Wrightson, lifting its stake above 50%. The offer is a 25% premium to Wrightson’s price yesterday. The shares have lost a fifth of their value this year.
“PGW has underperformed expectations in recent times, including a recent profit downgrade,” said Agria chief executive Xie Tao, in a statement. “In Agria’s view, PGW’s business requires restructuring and a refocus on the core businesses of AgriServices and AgriTech.”
Change is already underway at Wrightson, with George Gould named as new managing director effective on Feb. 1.
Pyne Gould Corp. will participate in the Chinese transaction, separately announcing today that it has signed a ‘lock-up deed’ with Agria for its 18.3% holding in Wrightson. Pyne Gould will recognise a loss of about $30 million on the holding, which is valued in its books at 82 cents a share.
Wrightson will retain John Anderson as chairman and keep its listing on the NZX.
After taking into account the sale of Pyne Gould’s stake, other shareholders will be able to sell as much as 38.3% of their holding into the offer and more shares are offered, scaling will apply.
The deal is dependent on approval by the Overseas Investment Office, which this week won support from the government to veto Natural Dairy (NZ)’s offer to buy the Crafar dairy farms.
Agria, whose American depository receipts trade on the New York Stock Exchange, and New Hope are being advised by Goldman Sachs & Partners.
Agria became the biggest shareholder in Wrightson in November 2009 when the rural services group sold shares at a discount to slash its debt levels. Back then, Agria paid 88 cents a share.
Agria’s ADRs rose 3.4% to US$1.52 in New York and have declined 48% in the past year.