PGG Wrightson boss upbeat on seeds sale
PGG Wrightson’s (PGW) seeds customers will not see a difference on a dayto-day basis if the division’s proposed sale to Danish company DLF Seeds for
$421 million goes ahead, PGW chief executive Ian Glasson says.
‘‘In fact, the brand has been licensed to DLF as well, so they’ll still see a seeds rep showing up with a PGW blue jumper. Other than the change in shareholding they’ll see no difference.’’
In a surprise move PGW announced it would seek shareholder approval in October for the sale, which will see it largely debt-free and up to $292m returned to shareholders.
Australian company Elders had been considered to be the frontrunning bidder.
The deal has to go through a number of regulatory hoops, including Overseas Investment Office (OIO) approval, New Zealand Commerce Commission clearance, and Australian Competition and Consumer Commission and South American approvals.
The Christchurch-based company’s remaining divisions – livestock, wool, real estate, insurance, and water – are valued at about $800m and would continue trading under the PGW brand.
Federated Farmers’ seeds vicechairman, David Clark, said the deal represented a windfall for PGW’s Chinese majority owner, Agria Corporation, which has been rumoured to be seeking to exit the company.
The proposed sale is the latest in a series of ownership changes that go back to the original merger of Pyne Gould Guinness and Wrightsons in
2005. That alliance of two of the country’s oldest and toughest competitors in the rural services industry has seen it dominate the sector.
Since then its fortunes have waxed and waned. Agria bought its shareholding at a fire sale in 2009.
‘‘The reality is PGW has been majority overseas owned for some years now,’’ Clark said.
‘‘DLF is a major and well established player in the global seed market. Growers will look forward to working with them in the future; they’re already established in New Zealand and this will increase their position. We hope they will retain the production of seed in New Zealand.’’
Glasson described the deal as a ‘‘pretty compelling transaction’’ for shareholders. For the meantime, until Agria’s board met, the relative shareholdings would remain the same.
The sale amount of $421m exceeds the book value of PGW Seeds’ net assets, which were estimated to be $285m. PGW could expect to have a net cash balance of about $270m following the sale.
Glasson said research and innovation would continue in New Zealand, as the country’s ‘‘incredibly reliable climate’’ in terms of rainfall encouraged investment in the seed-growing business. A lot of intellectual property was held via joint-venture companies and they would continue to get royalties.
The sale would see the creation of a global seeds business. PGW had taken strategic interests in Australia and South America but had struggled to get into the northern hemisphere.
Glasson said DLF was a seeds-only co-operative that had a heritage dating back to the 1870s.
PGW posted an after-tax profit of $46.3m for the 2016-17 financial year, up from $43.8m the year before. It had an annual turnover last year of $1.13 billion and employed 2200 staff. Its latest annual result is due out this week.