Zuellig Disappointed by PGG Wrightson Rejection

16 March 2011

Long-time New Zealand investor, The Zuellig Group, is “disappointed” PGG Wrightson’s directors have rejected its request to undertake due diligence on the company.

Senior group executive Peter Williams said Zuellig had sought the go-ahead to undertake due diligence, with a view to taking a cornerstone shareholding in the company.

“However, our request has been rejected, which is disappointing for Zuellig, as we believe we can make a strong contribution to this substantial Kiwi company. It is also particularly disappointing for PGG Wrightson shareholders who we think should have the ability to consider what a rejection of the Agria offer could entail, in particular having Zuellig as a new cornerstone shareholder.

“Despite this setback, if the Agria offer is rejected in April, we will again seek to undertake due diligence as Zuellig remains interested in acquiring a 19.9% stake in the company.”

Williams said Zuellig had outlined its plans when it met PGG Wrightson representatives in Christchurch on 4 March and had reiterated those aims in a letter on 14 March. Those objectives are:

• acquire a 19.9% interest in PGG Wrightson and assume an appropriate level of Board representation,

• bring Zuellig’s strong and relevant industry experience to bear, particularly with regard to PGG Wrighton’s merchandising businesses, its animal feeds and grain operation and its seeds business,

• assist the company to substantially improve the performance of its core AgriServices businesses and to facilitate its overseas growth ambitions, particularly the global
expansion of its world-class seeds business,

• provide PGG Wrightson with a stable long-term cornerstone shareholder and, therefore, end the inevitable distraction that has resulted from the changes to the company’s share register, and around the Board table, since it separated from Fletcher Challenge in 1993,

• partner with PGW’s existing NZ-based institutional and retail shareholders in PGW ownership, without any passing of legal control, thus allowing the broad group of stakeholders to remain involved to the same extent as they currently do,

• ensure PGW remains a NZ-based agribusiness.

“Zuellig continues to regard its objectives for PGW as constituting a higher value outcome for current PGW shareholders (excluding Agria) than the acceptance of the Agria partial takeover offer.”

Williams said Zuellig had opposed the Agria application to the Overseas Investment Office because it believed Agria failed to sufficiently meet the requirements of OIO legislation.

“In particular, we have concerns around the future direction and performance of the company, of which the non-Agria shareholders will continue to own 49%, under control of a shareholder of an unknown quantity.”

ENDS

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