Wrightson to buy back shares from investor who opposed DLF deal

Monday 24th December 2018

PGG Wrightson will buy back a small parcel of shares from an investor who voted against the sale of the seeds business to Denmark's DLF Seeds.

The rural services company said the investor has exercised minority buy-out rights in the Companies Act requiring the company to buy their shares after voting all of them against the resolution at the Oct. 30 annual and special meeting. Wrightson will buy back up to up to 9,724 shares between Jan. 7 and March 31 and automatically cancel them.

The small stake is worth just $4,570.28 cents at today's price of 47 cents, and immaterial to Wrightson's $355 million market capitalisation.

The Companies Act requires Wrightson to set a fair price, excluding any market fluctuations caused by the proposal to sell the seeds business, but the shareholder has the right to object to the price, in which case the price would be set by an independent arbitrator.

Wrightson shareholders overwhelmingly backed the sale, with 96.9 percent support at the combined meeting. However, the New Zealand Shareholders' Association opposed the transaction, saying the short-term gain for investors was offset by the remaining business being half the size and inferior to the seeds unit.

Still, the transaction isn't a done deal. Earlier this month, the Commerce Commission raised a number of matters in a letter of issues with the proposed purchase, chief of which was the potential concentration of market power in the ryegrass seeds market.

The antitrust regulator said analysis of the current markets probably understated the importance of DLF's research and development, and it sought responses to its concerns.

In a Dec. 14 letter, DLF played down the regulator's concerns, saying many of the issues raised were cleared by an earlier decision to allow the merger of Pyne Gould Guinness with Wrightson in 2005, and that it should use its previous approach in addressing this proposal.

In a separate submission, Wrightson agreed, saying the seeds supply in New Zealand isn't vulnerable to coordination, with little scope or incentive to do so.

(BusinessDesk)

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