PGG Wrightson, the rural services firm controlled by
China's Agria Corp, had access to the North Island market for
the first time after buying two water businesses, Forsyth Barr
broker Andrew Rooney said yesterday.
PGG had agreed to buy water businesses Water Dynamics and
Aquaspec from Switzerland's Pentair for an undisclosed sum.
The deal was expected to settle on October 29, and would
expand on PGG Wrightson's existing irrigation business, the
company said in a statement. Mr Rooney said irrigation had
been one of PGG Wrightson's best performing business units
''With the issues in Canterbury, following the high winds, we
expect the business will be doing well out of maintenance and
replacements. There is a four- to seven-week wait for
replacements which are being put on the boat over to here at
The purchase made sense, he said. Expansion of the strong
current business unit versus entering a new sector looked
good compared to some historic transactions.
Although the price was not disclosed, Forsyth Barr estimated
the purchase cost at about $5 million.
Full-year 2013 revenue from the existing irrigation business
was $45 million, revenue from the combined acquisitions was
about $14 million, and expectations were they could be
combined, Mr Rooney said.
''We are not expecting as strong a year in 2014 from the
existing irrigation business due to the perfect timing of
contracts in 2013. However, anecdotally, margins at these
businesses are in line with the current irrigation
operations,'' he said.
PGG Wrightson chief executive Mark Dewdney said irrigation
had been one of the group's highest-performing units and it
saw water management as a key challenge and opportunity in
agriculture and horticulture in the foreseeable future.
''These new businesses are very complementary to our existing
irrigation business and add a number of additional strengths
to extensively grow our reach across the water management
Water Dynamics and Aquaspec have 45 staff in Auckland,
Hastings, Christchurch and Cromwell.
Forsyth Barr maintained its buy recommendation of PGG
Wrightson shares and had a target price of 43c per share, Mr