KEY POINTS:
Listed rural services supplier PGG Wrightson has agreed to sell its port operations - and buy a feed import business.
Agri-feeds, a PGG Wrightson subsidiary, will sell port operations in Mt Maunganui and New Plymouth to Gardner Smith in a deal resulting in a capital gain of about
$5 million.
At the same time, Agri-feeds would buy molasses feed supplements importer and distributor 4 Seasons Molasses from Gardner Smith.
PGG Wrightson chief executive Barry Brook said the acquisition would strengthen the company's commitment to the growing feed market.
"The 4 Seasons business will complement our existing animal nutrition business and provide an extra level of opportunity for growth as the dairy industry expansion," Brook said.
PGG Wrightson's shares closed up 3c yesterday at 188c.
Gardner Smith, through a subsidiary, operated major bulk liquid storage in New Zealand, Australia and China.
Gardner Smith NZ general manager Scott Mitchell said the transactions would strengthen the company's core New Zealand business "through the addition of the Mt Maunganui port operations and further provide enhanced opportunities for our port storage business throughout New Zealand".
Meanwhile, PGG Wrightson has also agreed to form a join venture with Velconz Holdings to jointly market deer velvet in a joint venture to be called Velconz.
Working group chairman Ponty von Dadelszen said that more than a year ago suppliers had begun looking at how to better market velvet.
"This has been a challenging process," von Dadelszen said. "Balancing the needs of a low-cost entry for suppliers with the capitalisation requirements of a new entity designed to strategically add value to the product was not an easy task."
A transition process would see suppliers own half of the joint venture, which had a short-term goal of handling 70 per cent of the industry's velvet.
Velvet is the early stage antler which is highly popular in Asia where it is prescribed as a medicine.
Velvet exports for the year ended September 2006 were $22 million, down from $24 million the previous year.
No funds would be needed initially from suppliers, who would receive a share, either fully or partially paid, for each kilogram of velvet.
"The transition process takes into account the value in PGG Wrightson's existing pool system but is a clear indicator of their commitment to the velvet industry as an equal partner alongside the suppliers to Velconz," von Dadelszen said.
The working group wanted to engage with processors to understand how Velconz could help bring velvet processing back to New Zealand.
