GlobalCo stores deal monitored

By PHILIPPA STEVENSON agricultural editor

Global Dairy Co is set to become Wrightson's cornerstone shareholder in a series of deals which have sparked Commerce Commission interest.

Rural merchandising company RD1.com confirmed yesterday it had gained a 19.9 per cent share of Wrightson after buying out Guinness Peat Group for $26.7 million, or $1 a share.

New Zealand Dairy Group, which will become part of GlobalCo from October, owns 80 per cent of RD1.com - whose other major shareholders are ASB Bank and NZ Post.

RD1.com operates 27 AnchorMart farm stores, mostly in South Auckland, Waikato and the Bay of Plenty. It is also an internet retailer.

GlobalCo will also absorb the 21 Town and Country Agri Centres operated by the other company merging to form the mega co-op, Kiwi Dairies.

The addition of a stake in Wrightson's 77 stores to the shadow being spread by GlobalCo over farm trade outlets has sparked Commerce Commission interest.

A spokesman said yesterday that the commission was investigating whether GlobalCo's interest in the big network of rural service stores would make the sector substantially less competitive.

Last night, Wrightson chairman John Palmer welcomed dairy industry interest.

"The fact that Wrightson now has a cornerstone shareholder that is a major player in New Zealand agriculture and through GlobalCo, on the world stage, can only be positive."

The formation of GlobalCo created significant opportunities for industry integration and Wrightson looked forward to expanding its business beyond its traditional sheep and beef areas, Mr Palmer said.

RD1.com chief executive Neal Murphy said the availability of GPG's stake in Wrightson was timely because of the optimistic outlook in the rural sector.

"We liked the way they'd turned themselves around. We are pursuing profitable growth ourselves. We think Wrightson is a good company and we liked their initiatives, such as One Wrightson, and respect the investments they've made in biotechnology."

Tony Gibbs, New Zealand head of the Sir Ron Brierley investment company GPG, said the investor's 18-month shareholding had brought it a profit of about $17 million. In late 1999, GPG paid just under 40c a share in the then-struggling company.

Mr Palmer said GPG had been a constructive shareholder and its contribution had been valued.

Meanwhile, ownership consolidation is also afoot in the South Island where Reid Farmers, which has 21 trading stores, is proposing to merge with Pyne Gould Guinness, which has 20 stores.

Massey University professor of agribusiness Bill Bailey said the service sector's consolidation reflected aggregation in other areas including farms, processing and retailing.

RD1.com and Wrightson "made a good fit."

The deal could also be good for farmers by providing better services and cheaper prices.