Positive signals but challenges remain
PGG Wrightson (PGW) chief executive Stephen Guerin says that while there are positive signals within the market, there are also challenges.
New Zealand farmers will see no immediate difference onfarm from the sale of the PGG Wrightson Seeds business.
PGW said on August 1 it had agreed to sell PGW Seeds to the Danish seeds giant DLF pending shareholder and regulatory approvals. This ended weeks of speculation over a likely sale, with Australia’s Elders or Holland’s Barenbrug tipped as possible buyers.
Under the agreement, PGW will sell 100% of PGW Seeds for NZ$421 million. DLF Seeds will also assume or repay PGW Seeds’ net debt at June 30 of about NZ$18m.
PGW chief executive Ian Glasson said a lot of work had gone into ensuring a close working relationship between PGW and PGW Seeds under its new ownership. PGW provided a critical retail outlet for PGW Seeds, and similarly PGW needed seeds as part of its offering to farmers.
“So it’s a good synergistic and strategic relationship and that’s what we’ve spent a lot of time locking in.”
The PGW Seeds brand will be licensed to DLF so the company will operate as before, even the reps still wearing the familiar PGW blue pullovers.
“You will see PGW Seeds people in the paddocks alongside PGW Livestock reps or real estate reps or whatever else is there.”
They would continue with the Wrightson name “for some time,” he said.
“On the farm, nothing changes as far as the farm is concerned other than the seed business is now owned by a group of seed growers in Denmark.”
Glasson said it is important that DLF is a cooperative of seed growers who “really get” the seeds business. The offering of seed varieties will grow. “Farmers will not see any change on the field; hopefully we can improve, give a broader offering of seeds and increase the rate of development of new offerings.”
Glasson said all this was decided after a review last year before he arrived at the company in November. The board is yet to decide where next to take the review but it has options including repaying $290m to shareholders in an essentially tax-free capital return.
“Then the question is, do you use the rest to repay debt or grow the business?”
Glasson said DLF’s compelling offer would be good for all stakeholders -- “a substantial amount of cash and it’s a good price for the business”.
PGW with a good rural services businesses with sales of $800m of the $1.2 billion total.
The largely Chinese-owned Agria Asia owns 50.2% of PGW; and Glasson pointed out that Ngai Tahu owns 8% of Agria Asia so the majority shareholding is indirectly NZ-based. It has corporate and mum-and-dad investors, including many rural shareholders, he said.
The proposal will probably be put to shareholders at the annual meeting in October.
Farmers appear to be backing the Government's recent Resource Management Act (RMA) reforms announcement.
For the first time, all the big names in agricultural drone technology are being brought together under one marquee at the National Fieldays.
Fonterra has announced an improved third quarter performance – with a profit after tax of $1.15 billion, up $119 million on the same period last year.
The Fieldays Innovation Awards competition has attracted a diverse and impressive array of innovations from across the primary industries, highlighting the growing importance of technology shaping the future of farming.
Coming to the fore following the carnage of Cyclone Gabrielle, Starlink became well known for providing internet access even in NZ's most inaccessible places.
From this winter farmers will have a greater choice of feed types and blend options than ever before, thanks to Farmlands' purchase of animal nutrition company SealesWinslow.
OPINION: The Free Speech Union is taking this one too far.
OPINION: New national data from The Drug Detection Agency (TDDA), a leading workplace drug tester, shows methamphetamine (meth) use is…