PGG Wrightson Ltd (PGW) is advising shareholders not to sell their shares after Chinese agricultural company Agria Corp signalled a move to take control of the rural services firm with a Chinese partner.
The bid came as PGW named Christchurch businessman George Gould as managing director.
Agria became a cornerstone shareholder in PGW after New Zealand businessman Craig Norgate retreated from bold plans, including a merger with Silver Ferns Farms, when the global financial crisis hit.
Today notice was given of a partial takeover bid by Agria (Singapore) Pte, which will be jointly owned by Agria and New Hope Group, one of China's largest food companies. Agria (Singapore), currently a wholly owned subsidiary of Agria, owns 19.01 percent of PGW and wants to move to 50.1 percent. To help it get there it has a pre-bid agreement with 18.3 percent shareholder Pyne Gould Corp.
The offer price is 60c a share, which is a 25 percent premium to the previous closing price. PGG Wrightson shares soared 16.7 percent to 56c on news of the notice to bid.
PGW told shareholders not to sell their shares and said a target company statement and independent report by Grant Samuel & Associates would be sent to them.
The documents released today say that in principle Agria is supportive of the divestment of PGG Wrightson Finance Ltd's finance book so PGW can focus on its core agriculture service and technology businesses.
Agria chief executive Xie Tao said PGW had under-performed in recent times, including a recent profit downgrade, and a refocus on the core businesses was needed.
If the offer was successful PGW would remain as a New Zealand-based listed company, and Agria had no intention of increasing its shareholding above 50.01 percent and had committed not to make a further offer at a higher price for a period of 12 months.
New Hope's chairman and founder Liu Yonghao was a highly regarded businessman and was vice-chairman of MinSheng Bank, one of China's largest commercial banks, and also a member of the Chinese People's Political Consultative Conference economic committee.
Business columnist Brian Gaynor has written that agriculture companies are under-represented on the NZX and also that they have under-performed. PGW traces its history back to Wright Stevenson in 1865 and in the 1980s it became part of the Fletcher Challenge group. It was floated on NZX in 1993. Gaynor has said that PGW has undertaken a large number of mergers and reorganisations since then, with its latest, under Mr Norgate, being a near-death experience.
PGW chairman Sir John Anderson said Mr Gould would become managing director on February 1.
Mr Gould has been a director of PGW since January 2010 and is the former managing director of Pyne Gould Guinness Ltd. He will be based at the company's Christchurch head office.
New Hope has revenues of around $NZ12 billion. PGW had revenue of $NZ1.15 billion in the year to June 30.
