PGG Wrightson advisers nurture rivals to Elders in takeover play

Advisers working on the sale of PGG Wrightson in New Zealand appear to be working hard to create competitive tension for takeover favourite Elders in the sale process.

Credit Suisse and its New Zealand affiliate, First New Zealand Capital, are looking at a possible break-up of the listed company where Barenbrug Holland buys the seeds operations and another party acquires the remainder of the operation.

Elders has not yet made any binding offer for the company, but the expectation is that its bid will come towards the end of this month at close to $NZ600 million ($549m), as revealed by DataRoom.

Its interest extends to the entire company only, including the seeds business that it wants to retain.

Dataroom for Tuesday on Elders

Some nervousness exists among PGG Wrightson’s employees and managers about what Elders’ intentions are for the business and the cultural fit.

But those close to Elders have described the two companies as “like siblings” being around the same age, and the top executives of each company are thought to have had a relationship for several years.

Several other competitors that were earlier looking at PGG Wrightson — including Paine and Partners, CK Life Sciences and Landmark — are thought to have left the competition.

Dataroom for Tuesday on Elders

Barenbrug owns Heritage Seeds in Australia — a likely reason for its interest.

Ruralco was contemplating a scrip bid for the business, but the deal was never thought to be realistic for the Australian company given its $322m market value. Macquarie Capital is advising Elders, which has a $1 billion market value, on the potential purchase.

A sale has been triggered by the desire of 50 per cent shareholder Agria Corporation out of China to exit the group listed in New Zealand.

Dataroom for Tuesday on Elders

Analysts say the acquisition would be a good move for Elders, given PGG Wrightson is considered a good business and the right fit for the Australian-listed group. They say Elders may be better off not owning the South American operations of PGG Wrightson, but Elders chief executive Mark Allison is known to be set on buying the business in its entirety.