South Island rural merger goes ahead

The companies have been investigating a potential merger between Reid Farmers and PGC's rural trading arm, Pyne Gould Guinness, for the past three weeks.

Reid Farmers' chairman Bill Baylis and PGC chairman Sam Maling say both customers and shareholders will benefit from the decision to go ahead with the deal.

"These businesses comprise very complementary activities. By merging them, we can build on our respective individual strengths and deliver a wider and improved range of services to the customer of both companies.

"This has to be good news for our farmer clients and shareholders alike."

Under the merger agreement Reid Farmers will issue 44 million shares to Pyne Gould in consideration for the acquisition of Pyne Gould Guinness.

Taken with its existing 44% investment in Reid Farmers, this will give Pyne Gould Corporation will a 68.5% shareholding in Reid Farmers once the merger is completed.

The shares will be issued at a price of $1.10 per share but will not qualify for final dividend in respect of the financial year ended last month. The merged company will be renamed Pyne Gould Guinness Reid Farmers Limited and will have its head office in Dunedin.

The companies says the merger terms place a value of $48 million on the business of Pyne Gould Guinness prior to the share market's further re-rating of the sector since 13 June.

Reid Farmers' shareholders should receive an independent expert report on the merger in around three weeks and a shareholder meeting to approve the deal is planned for the end of August.

"The independent directors believe that a merger with Pyne Gould Guinness is the best strategic option available to the company to further increase shareholder value and that the terms which have been agreed are favourable for Reid Farmers shareholders," says Reid Farmers' chairman Bill Baylis.

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