Chairman of the listed rural servicing company, Craig Norgate, told nearly 200 Silver Fern Farm shareholders in Balclutha last night the dividend from the $220 million investment would be "enough to wipe your face with".
The main dividend would be in having viable sheep and beef farming clients, and the extra business they would generate, shoring up the company's $200 million livestock business.
Last night's meeting, the seventh of 10 planned in the South Island, was relatively subdued, with farmers quizzing Mr Norgate, SFF chairman Eoin Garden and chief executive Keith Cooper on the details.
PGG Wrightson would get 50% of the distributed profit and SFF suppliers the balance, a deal Mr Norgate said was fair, given what the company was bringing to the table.
One farmer felt with promised savings of between $60 million and $110 million from the deal, plus $16 million less in SFF interest costs, $220 million for a half share was relatively cheap.
Mr Cooper said most of those savings would be returned to farmers in the form of higher lamb returns.
The financial gains would come from having a higher market profile; more procurement staff, resulting in more stock and better plant efficiency; and returns from new investment and back-office synergies.
Mr Norgate said PGG Wrightson may get a cash return.
"We deserve some of it because of what we bring to the table."
South Otago farmer John Bamford questioned whether $440 million was a fair valuation of the company, given PGG Wrightson were getting half for $220 million.
The deal values SFF at $4 a share.
Mr Garden pointed out that not long ago it was valued at 10c a share.
SFF was still to be independently valued and that, along with the Pricewaterhouse Coopers report on the proposal, would be released to shareholders in the next few weeks.
Mr Norgate received applause when he said the meat industry could be equivalent to Fonterra, but it had to change quickly.
"I don't want to see sheep farmers despondent any longer or they will continue to vote with their feet and continue to move to milk, and that is not good for New Zealand as a whole."
