Both developments have long-term implications for shareholders and farmers alike.
Although the combination of the pairing within PGGW may well lay the foundation for hugely boosting revenues,neither scenario is without its snags, Craigs Investment Partners broker Peter McIntyre says.
"PGGW has come full circle and is going back to its rural roots, and at a time commodities are strengthening," he said.
This month PGGW, which is already considering a $227 million 50.01% takeover bid by China-based Agria Corp, dismissed more talk of an alternative 19.9% offer by Hong Kong-based investment company Zuellig Group. PGGW shareholder Pyne Gould Corp has already agreed to sell its 18.3% holding in PGGW to Agria, as Agria seeks to build its controlling stake.
Agria's 60c-per-share offer closes on April 15.
Mr McIntyre said New Zealanders were still "sitting uncomfortably" with the concept of foreign ownership, more so in the agricultural commodities arena, which has delivered strong growth and returns.
Singapore-based Agria, which is yet to gain Overseas Investment Office approval, is partnering in the takeover deal with New York stock exchange-listed New Hope, one of China's largest agricultural and food corporations with revenue of $NZ12.1 billion in the 2010 financial year.
About 85% of New Hope's revenues are from combined income through its agricultural and food divisions.
By comparison, PGGW has a market capitalisation of $379 million.
Revenue from the last financial year is forecast to improve from $1.1 billion to $1.2 billion this year.
However, Mr McIntyre is forecasting huge after-tax profit increases from $16 million this year to $30 million next year, then $41 million in 2013.
"The [takeover] positives are access to more capital for PGG; the agricultural sector is in demand and it has a strong representation in several sectors," he said.
Besides cattle and sheep procurement for the freezing works, PGGW has seed, feed and wool marketing plus agri-tech and agri-services divisions.
Mr McIntyre said its seed division was "the jewel in the crown".
On foreign ownership, Mr McIntyre said that as a large national company PGGW would always be open to offshore takeover bids, and there would be concern New Hope could have a "China bias", to New Zealand's detriment.
"New Hope wants bilateral partnerships between New Zealand and China, which should be positive for our farmers," Mr McIntyre said of future developments being applied to the agri-sector here.
Agria's 60c per share offer is at the "top end" of an independent valuation of 53c-63c, and Mr McIntyre did not believe it would be revised up.
Also last week, PGGW announced it was upping its 49% stake in Wool Partners International to 100%, after an unsuccessful bid to lure strong-wool farmers to back a proposed co-operative.
Mr McIntyre said while the co-op proposal was "heated and contentious" and could have become divisive, it to some extent united strong-wool farmers and got PGGW to the table to look afresh at strong-wool marketing; much as the merino sector which has been rebranded afresh, successfully.
"Strong-wool prices are near the highs of late 1980s, having been knocked for years with it [the sector] being seen as a dinosaur," he said.
Developments in the synthetic carpets industry had largely prompted the downfall of prices in the strong-wool sector, but Mr McIntyre said with escalating oil prices likely to threaten synthetic pricing and increasing global wool demand, the strong-wool sector was "well positioned" to capitalise on emerging opportunities.
He said PGGW, in taking back control of WPI, part of a wool brokering and handling services sale in 2008, would not be spun off into a listed company, but in a "conciliatory gesture" to farmers they would hold shares in the company.
