PGG deal fulfils merino growers' dream

PGG Wrightson managing director George Gould. File photo / Glenn Jeffrey

PGG Wrightson has agreed to sell its stake in New Zealand Merino for $7.6 million in a deal it says will put the business in full control of its grower shareholders.

Listed rural services firm PGG Wrightson will sell its 50 per cent stake in NZ Merino to joint venture partner Merino Grower Investments (MGIL).

PGG Wrightson managing director George Gould said the deal supported the vision of merino growers to determine their own destiny by gaining outright control of Christchurch-based NZ Merino, which lists Icebreaker among its brand partners.

MGIL chairman Bob Brown said it had been a long-held dream of growers to gain control of the merino company.

"It's like buying anything, you always have to pay more than you want to pay ... but this is a valuation that was independently set, it's a valuation that both buyer and seller have been able to agree to," Brown said.

There was an intention to widen the shareholder base - currently limited to merino growers - with part of the strategy to change the constitution to allow employees and mid-micron growers to become shareholders.

The commercial involvement of PGG Wrightson had been instrumental in getting the company this far, he said.

"Time moves on, things change, there's been a desire all along for growers to drive their own truck and now's the opportunity to do so."

New Zealand Merino chief executive John Brakenridge said: "It's really business as usual in terms of the strategic side but I guess it's a pretty exciting business in terms of where it's tracking at the moment."

The company, with sales routes including contracts with retail brand owners and auctions, had turnover of about $120 million this year with the vast majority of wool exported.

NZ Merino and Silver Fern Farms in February launched three-year meat contracts for fine wool growers.

"The demand for our fibre the early interest in the meat and the other products is very exciting."

The sale agreement was conditional on approval from MGIL's shareholders and the purchase price was based on an independent valuation by PricewaterhouseCoopers.

Shares in PGG Wrightson closed up 2c yesterday at 53c.