PGG Wrightson says 'don't sell' to Agria, pending assessment of offer
Dec. 24 (BusinessDesk) – PGG Wrightson Ltd. has recommended shareholders hold off on accepting a 60 cents-a-share offer for control of New Zealand's biggest rural services company, pending an assessment of the deal.
The "don't sell" notice comes after Pyne Gould Corp. signed a ‘lock-up deed’ with Agria Corp. for its 18.3% holding in Wrightson. Taken together with Agria's existing 19% stake, the partial takeover offer would only require a further 13% to move to the bidders, Agria and New Hope Group of China to a majority holding.
Pyne Gould will recognise a loss of about $30 million on the holding, which is valued in its books at 82 cents a share.
"The directors recommend that shareholders await receipt of the target company statement before making any decision regarding the offer," the company said.
Wrightson said it has retained Grant Samuel & Associates to prepare the independent appraisal report and the appointment had been approved by the Takeovers Panel.
Agria and New Hope's offer amounts to $141 million and would give shareholders a 25% gain on the existing share price.
Wrightson's shares jumped 17% to 56 cents, lagging behind the offer price, which can be a sign investors don't see much upside. The stock was down 20% this year, up to yesterday.
“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.
Wrightson will retain John Anderson as chairman and keep its listing on the NZX. That means the new majority owners would also have a fresh-faced board and executive.
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.