PGGW may become two businesses

Things are hotting up in the bid for ownership of rural servicing company PGGWrightson.

The involvement of NZ companies in the bid seems to be aimed at keeping some of the expertise in local hands, although by how fast and extensive the bids are being accepted, investors seem keen to bail out quickly.

Years of disappointing results have seen the share price fall and it seems investors have lost patience and are cashing up. Livestock farmers will be watching with interest how the new ownership plans the future.

NZ's largest rural services firm, PGG Wrightson, may be split in two. Hamilton's Livestock Improvement Corporation suggested that when it confirmed to the NZX yesterday it was lending Agria Singapore, the Chinese firm bidding for a majority stake in PGGW, $10 million for a 18-month term at commercial rates.LIC, which sells dairy genetics in 22 countries, is the second large New Zealand player to be drawn into the Chinese bid to gain 50.01 per cent of PGGW.

At the weekend Ngai Tahu Holdings Corporation signed a shareholders' agreement with Agria, a small audacious company which has secured New Hope, a leading Chinese agricultural business, as its partner.Ngai Tahu has agreed to buy a 7 per cent stake in Agria Asia, which owns Agria Singapore, the bidding company, for $15m but that must be approved by the 49 per cent of PGGW shareholders not associated with Agria and New Hope. The alliances with LIC and Ngai Tahu look like they are designed to make Chinese control of PGGW acceptable.

LIC chief executive Mark Dewdney said LIC's main interest was in supporting the PGGW AgriTech business which comprised Seeds, AgriFeeds, and Grain. LIC had no plan to invest directly in the overall business of PGGW.Mr Dewdney said LIC was searching for the right distribution partner in China, where it saw significant growth potential, and believed it had found capable partners in Agria and New Hope.

Acceptances for the 60 cents a share Chinese bid for majority control of PGG Wrightson are streaming in as the bid expiry nears. The bidding company, Agria Singapore, this morning notified the NZX it has control of 73.03 per cent of the shares of New Zealand's largest agricultural services company. The bid expires on Saturday. The higher the percentage acceptance the more scaling will be required.

The rising acceptance rate means Pyne Gould Corporation, which has agreed to sell its entire 18.3 per cent in PGW to Agria, will be scaled back like other shareholders. The bidding company has also secured a loan of $53m from ANZ, the first ranked lender.