Elders takes 11pc stake in PGG Wrightson, does not seek control

Elders has taken a stake in rural services group PGG Wrightson. Photo / File

Australian rural services giant Elders said it does not intend to take over PGG Wrightson (PGW) after spending $37.1m on taking an 11.3 per cent stake in the company.

Elders said the purchase was in line with its “geographic diversification strategy”.

The stake was acquired by private sale at $4.35 a share, compared with yesterday’s closing price of $4.20 after a heavier-than-normal day’s trading in the stock.

Elders said the purchase would be funded by debt.

“Elders does not currently intend to initiate a proposal to acquire control of PGW,” it said in a statement to the ASX.

PGW is a full-service agricultural supplies and services business with a market capitalisation of about $312 million.

The company employs more than 1,800 people in 170 locations across New Zealand.

In August, PGW said a strong performance from its retail and water business helped drive earnings to a record over the June year.

The company’s net profit came to $24.3 million, up 7 per cent on the prior year’s.

Operating ebitda came to $67.2m, up 20 per cent, slightly ahead of the top end of its guidance of $62m to $66m.