Otago Daily Times | Sun, 26 Dec 2010
By Neal Wallace
China's interest in New Zealand agriculture continued this week, but the head of the company leading a partial takeover of rural servicing company PGG Wrightson (PGGW), said it was a pure business move.
Chinese agribusiness companies Agria of Beijing and New Hope Group of Sichuan, on Friday launched a joint bid to take Agria's stake in publicly listed PGGW from 19.01% to a controlling 50.01% by offering 60c a share, but Agria chairman and chief executive Xie Tao said the move was not motivated to secure resources such as food.
''From that angle, we want to set up an example that, together with New Hope, we can go overseas with a good marriage and make investments in entities and make them profitable,'' he said in an interview from Beijing.
PGGW's second-largest shareholder, Pyne Gould Corporation (PGC), whose founding fathers nearly 160 years ago established one of the legacy companies in PGGW, has agreed to sell its 18.3% stake, despite PGGW directors on Friday advising shareholders not to sell until an independent assessment was made of the offer.
Sharebrokers said that by securing PGC's stake, Agria should get the rest of the shares it wanted.
Chinese companies have been actively looking at New Zealand business in recent years, especially agriculture, a move many commentators say was motivated by the developing country's hunger for resources such as food.
In July this year, China's third-largest dairy company, Bright Dairy, bought 51% of the processing arm of independent dairy processor Synlait Milk and last week the Government rejected a bid by China-backed Natural Dairy (NZ) Holdings to buy the 16 Crafar family dairy farms.
Mr Xie said the PGGW takeover was a straight investment motivated by business goals of implementing efficiencies, utilising the enlarged entities purchasing power, growing farm product value not volume and changing aspects of PGGW's culture.
Mr Xie believed PGGW had become corporatised and was not close enough to its farmer clients.
''We need people who are hands-on, in the trenches in rural society rather than staying in Auckland,'' he said.
Farmers appear relatively comfortable with the notion control of the long-established rural servicing company may fall in to overseas ownership.
North Otago Federated Farmers president Ross Ewing, who learnt of the takeover from the media, said PGGW was a publicly listed company, so it was different from a farmer-owned co-operative.
Farmers were more interested in the service provided and the cost of products and it was reality that many companies had to look overseas for funding which was not available here.
Farmers had plenty of choice if they were not happy with the service from a rural servicing company.
''If they don't do a good job, we have got options.''
