Languishing Genesis attracts Wrightson raid

By PHILIPPA STEVENSON and NZPA

Rural services company Wrightson's bid for a cornerstone stake in biotechnology firm Genesis Research netted it just over 14.8 per cent of the shares yesterday.

Wrightson, which already has research links with Genesis, is seeking 19.9 per cent of the company at $1.31 a share. Its bid is scheduled to close at 3pm today unless the target is reached earlier.

The offer was 35 per cent up on Genesis' Monday closing price of 97c.

Wrightson had bought 14.8 per cent of Genesis by midday yesterday but gained less than 1 per cent more over the rest of the day.

Reports suggested most of the shares sold appeared to be from institutions.

ASB Securities private equities broker Stephen Wright said most retail sellers would take a loss if they sold now because Genesis shares were $2 about four months ago.

The company had cash reserves worth about $1.70 to $1.80 a share "so they're still well below their net asset backing, plus they get grants from Government organisations and joint ventures, they have got cash flows, and they have made progress on several fronts which of course can't be quantified or valued".

Genesis said yesterday that it had been awarded an $800,000 grant over two years from Technology New Zealand to support the development of new gene discovery software and capitalise on its investment in plant gene databases.

The biotech company and British partner SR Pharma also announced the completion of the first phase of a study of a childhood eczema treatment, Avac, which showed the injections were safe and well tolerated.

Wrightson's move on Genesis is seen as widening its access to different types of research, as it gets more involved in the bigger picture of livestock development and greenhouse gas research.

"Wrightson has consistently advocated the need for more collaboration among the many parties involved in agricultural biotechnology, and we hope that our investment in Genesis will provide an impetus for other collaborative initiatives," said chief executive Allan Freeth.

Wrightson, which is best known for its rural retail chain and farm finance, is also involved in seed and grass technology, and has had a three-year partnership with Genesis in forage research.

Wrightson's biggest shareholder is RD1, a retail subsidiary of dairy giant Fonterra, which is working on dairy cattle and clover genetics.

In December, Wrightson joined the Pastoral Greenhouse Gas Research Consortium, a combined industry and Government initiative seeking ways to reduce methane production from cattle, sheep and deer.

If a pasture can be developed to reduce methane, it could not only lower greenhouse gases but result in animals with more energy to convert into milk or meat.

Genesis chief executive Jim Watson said the move would probably strengthen his company's interest in pasture research.

"Most of the livestock industry believes gains in productivity are more likely to come through better nutrition in the grasses than actually through continued genetic improvement in the animal itself."

In addition to grasses, Genesis is involved in several human health treatments and in forest research.

It was already interested in ways in which plants could be used to capture carbon emissions, Watson said.

As far as the offer was concerned, he said Wrightson had been a good collaborator and seemed to see Genesis' low share price as a good chance to invest in biotechnology.

"The whole biotech industry globally is in a slump and there are in Australia, the United States and Europe ... many companies which are trading at a share value which is not reflected in their cash value," he said.

Shares in Genesis have fallen sharply from $5.10 a couple of years ago to an alltime low of 90c last week, reflecting the competition and long time Genesis faces in getting some of its products to market.

Genesis made a loss of $10.7 million in the year to December.

Wrightson said the Genesis investment would have no impact on the dividends payable by the company.