PGG Wrightson tells shareholders to wait

Agria and New Hope Group combine to bid for 50.01 per cent of rural supplier. Photo / Christine Cornege

PGG Wrightson has told shareholders to hold off selling while it evaluates a joint bid made by its cornerstone shareholder Agria and another Chinese company to take a majority stake in the agricultural services firm.

On Friday, New York-listed Chinese company Agria Corporation, which already owns 19.1 per cent of Wrightson, said it would partner with New Hope Group in a partial takeover to increase its stake to 50.01 per cent.

An offer of 60c a share would be made by a jointly owned company called Agria (Singapore) Pte to acquire a further 235 million shares in Wrightson in an offer worth around $141 million.

Wrightson's shares were trading at 48c before the offer was made and closed up 8c on Friday at 56c.

Major Wrightson shareholder Pyne Gould Corporation has already agreed to sell its 18.3 per cent stake into the offer through a pre-bid lock-up agreement. Agria chief executive Xie Tao, who is also a director of Wrightson, said the offer provided an opportunity for existing shareholders to sell a portion of their shares at a premium to the market price, while allowing them to retain an interest and benefit from the longer-term opportunities.

"We are particularly keen to strengthen the relationship between PGW and its key farmer customers and shareholders, who we see as playing an increasingly important role in PGW in the future."

A statement from Wrightson's directors said shareholders should hold off selling their shares until they receive all the information about the offer.

"The directors recommend that shareholders await receipt of the target company statement before making any decision regarding the offer."

After PGC, major shareholders in Wrightson include the Accident Compensation Corporation, which owns around 3.9 per cent; AMP, with 3.6 per cent; and the New Zealand Superannuation fund, which owns about 2.7 per cent.

Tao said Wrightson had underperformed expectations in recent times and the business needed restructuring.

"The proposed transaction will provide PGW with a committed cornerstone shareholder with the capacity to leverage PGW's product and service offering to access opportunities in the China market for the benefit of all PGW shareholders."

Tao said if the offer was successful the company would remain a New Zealand-based listed company.

He said Agria had no intention to increase its shareholding above 50.01 per cent and was committed to not making a further offer at a higher price for at least 12 months.

The offer is conditional on approval from regulatory authorities including the Overseas Investment Office and relevant authorities in China.

The official takeover document is expected to be sent out to shareholders in late January.

AGRIA (SINGAPORE)

* Jointly owned by Chinese companies Agria Corporation and New Hope Group.

* Agria Corporation is a New York-listed Chinese-based company with investment in the agriculture sector.

* New Hope Group is one of China's largest.