Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

UPDATE: Wrightson shares jump 9.4%

UPDATE: Wrightson shares jump 9.4% on plans to sell seeds unit for $439M; may distribute cash


By Tina Morrison

Aug. 6 (BusinessDesk) - Shares in PGG Wrightson jumped as much as 9.4 percent after the country's largest rural services business said it had agreed to sell its seed and grain business to Danish cooperative DLF Seeds for $421 million in cash and $18 of debt repayment, and signalled it may return up to $292 million to its shareholders.

The sale is above the $285 million book value of the seeds business and follows several expressions of interest received from international parties as part of a strategic review underway with Credit Suisse (Australia) and First NZ Capital. The Christchurch-based company expects to have a net cash balance of about $270 million following the sale and could distribute as much as $292 million to shareholders.

PGG Wrightson shares rose as much as 6 cents to a seven-week high of 70 cents, and recently traded up 6.3 percent to 68 cents, valuing the company at $490 million.

"It's a very good price given it is well in excess of the book value of their seeds business and I think also there is going to be a rather large capital distribution made back to shareholders," said Hamilton Hindin Greene director Grant Williamson. "It's going to be a much smaller business going forward. They are going to change their focus somewhat and become more focused on the livestock side of the business. The jewel in the crown is getting sold to some degree."

The seed and grain unit is the largest of PGG Wrightson's three core businesses, generating more than half of its operating earnings in the last financial year from across New Zealand, Australia and South America. For PGG Wrightson, the sale frees up cash for debt reduction, distribution to shareholders and strategic growth opportunities while retaining access to the seeds business through a long-term distribution agreement as well as ongoing royalty payments from a larger business.

Meanwhile, for DLF Seeds, the acquisition gives the Northern Hemisphere-based business access to the leading temperate forage seed operation in the Southern Hemisphere to create a strong global offering for customers.

"The agreement represents a transaction that would deliver significant value to PGW while also enabling the PGW Seeds business to benefit immensely from being part of an impressive global seeds operation," PGG Wrightson deputy chair Trevor Burt said in a statement. "The DLF Seeds offer was particularly compelling in terms of the value it would deliver to PGW shareholders."

The deal is subject to several conditions, including approvals from shareholders, New Zealand's Overseas Investment Office, antitrust regulators in New Zealand, Australia and South America, consent from PGW Seeds' joint venture partners and PGG Wrightson's banking syndicate.

The PGG Wrightson board unanimously supported the conditional agreement, which chair Trevor Burt said was "very attractive".

The board has engaged KordaMentha to prepare an independent appraisal report on the merits of the transaction for the company's shareholders, ahead of a meeting and vote expected in October.

PGG Wrightson's shares, which are 50.2 percent owned by Asia's Agria Corp, have gained 6.2 percent over the past year.

(BusinessDesk)

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Fuels Rushing In: Govt "Ready To Act" On Petrol Market Report

The Government will now take the Commerce Commission’s recommendations to Cabinet...
• A more transparent wholesale pricing regime • Greater contractual freedoms and fairer terms • Introducing an enforceable industry code of conduct • Improve transparency of premium grade fuel pricing... More>>

ALSO:

Reserve Bank Capital Review Decision: Increased Bank Capital Requirements

Governor Adrian Orr said the decisions to increase capital requirements are about making the banking system safer for all New Zealanders, and will ensure bank owners have a meaningful stake in their businesses. More>>

ALSO:

Aerospace: Christchurch Plan To Be NZ's Testbed

Christchurch aims to be at the centre of New Zealand’s burgeoning aerospace sector by 2025, according to the city’s aerospace strategic plan. More>>

ALSO:

EPA: Spill Sees Abatement Notice Served For Tamarind Taranaki

The notice was issued after a “sheen” on the sea surface was reported to regulators on Thursday 21 November, approximately 400 metres from the FPSO Umuroa. A survey commissioned by Tamarind has subsequently detected damage to the flowline connecting the Umuroa to the Tui 2H well. More>>

Taskforce Report: Changes Recommended For Winter Grazing

A Taskforce has made 11 recommendations to improve animal welfare in intensive winter grazing farm systems, the Minister of Agriculture Damien O’Connor confirmed today. More>>

ALSO: