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Agria and New Hope look to pastures new
Date:2010/12/27      View:1085
PGG Wrightson Ltd shares rose the most in 14 months after a Chinese company bid to take partial control of New Zealand's largest agricultural services company.

Zhongshan-based Agria Corp and New Hope Group, a Chinese agriculture and food group, offered to pay 60 New Zealand cents (45 cents) a share to raise their stake to 50.01 percent, according to a statement issued after the close of trading on Thursday. The offer is 25 percent higher than the closing price on Dec 23.

PGG Wrightson gained 16.7 percent to 56 New Zealand cents as of the 4 pm close in Wellington. The gain was the biggest since October 2009.

The offer was made by Agria (Singapore) Pte Ltd, a company held by Agria and New Hope that currently has a 19.01 percent stake in Wrightson. The Christchurch-based company sold an 11 percent stake to Agria in October to help repay a NZ$200 million ($149 million) loan after a plunge in commodity prices and the value of Wrightson's investment in a Uruguay dairy venture forced a renegotiation of finances.

"PGW has underperformed expectations in recent times, including a recent profit downgrade," Agria Chief Executive Officer Xie Tao said in the statement. "PGW's business requires restructuring and a refocus on the core businesses."

Pyne Gould Corp, Wrightson's second-biggest shareholder, agreed to sell its 18.3 percent stake in the company to Agria, according to the statement. Wrightson is supportive of the offer, according to a separate statement issued by Pyne Gould on Friday. Wrightson recommended its investors don't sell shares until the offer is evaluated, the company said in a regulatory filing.

Agria will pay NZ$141 million for the new stock and won't increase its shareholding above 50.01 percent if the bid is successful, or make a further offer at a higher price for a period of 12 months, according to the statement.

The offer is conditional on government approvals. New Zealand this week rejected a bid by China's Natural Dairy (NZ) Holdings Ltd to buy land assets because the application didn't meet "good character" criteria. The rejection came after the government in September gave ministers greater power to quash sales of large farm blocks and other sensitive land amid rising concern about foreign ownership in key industries.

Agria, Wrightson's biggest shareholder, develops corn seed varieties and runs sheep-breeding operations and tree nurseries in China. The company acquired an 11 percent stake in Wrightson in October last year and another 8 percent a month later.

Chengdu-based co-operative New Hope is one of China's largest agricultural and food companies and reported revenue of about $60 billion yuan ($9 billion) in 2010, according to the statement.

Wrightson on Friday appointed George Gould managing director starting Feb 1, according to a statement sent to the stock exchange. He replaces Tim Miles, who resigned on Oct 19 after the company said it was considering a new strategy.

The company last week lowered its full-year earnings forecast, citing difficult first-half trading conditions on the nation's farms.
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