Monday 7th February 2011 2 Comments |
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Independent directors of PGG Wrightson are recommending the company's shareholders accept a partial takeover offer from shareholder China-based Agria Corp.
On Christmas Eve Agria announced a bid for 38.3% of the shares in PGG Wrightson at 60c per share, which would take Agria's shareholding to 50.01%.
An independent report published today by Grant Samuel & Associates assessed the underlying value of PGG Wrightson shares to be between 53c and 65c.
Grant Samuel also advised that the earnings multiple implied by the offer compared favourably with earnings multiples implied by recent transactions for comparable companies.
PGG Wrightson chairman John Anderson said that comparison in part reflected a negative near term earnings outlook for PGG Wrightson.
The independent directors had noted that while the offer would have merit for shareholders with a near term focus, or who valued near term certainty, shareholders with longer term investment horizons may well conclude the offer undervalued PGG Wrightson's longer term prospects.
On Friday, PGG Wrightson announced it had agreed to another potential bidder carrying out due diligence. That party had indicated an interest in making a bid for all shares in the company, although there was no certainty of a better bid emerging.
Today, Sir John said that on the basis of the Grant Samuel valuation and in the absence of any better offer, the independent directors recommended to shareholders they accept the Agria offer.
But because of the potential for an offer from another party to emerge, the independent directors recommended shareholders wait until near the close of the Agria offer period, currently April 15, to make their decision.
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