Competition watchdog the Commerce Commission today cleared rural service firms Wrightson Ltd and Pyne Gould Guinness (PGG) to merge.

Wrightson shares rose 10c to $2.50 on the news and Pyne Gould shares rose 13c to $2.39. Pyne Gould Corp was up 5c to $5.15.

Commission chair Paula Rebstock said the commission had analysed the implications of the merger on the agricultural sector, and considered a number of issues in the areas of livestock trading services, wool services, retail supplies and grains and seeds.

"Having regard to the degree of existing and potential competition in each of the relevant markets, the commission is satisfied that the proposed merger would not have, or would not be likely to have, the effect of substantially lessening competition," Ms Rebstock said.

Listed Dunedin-based PGG is a rural servicing provider to the South Island. It has limited involvement in the North Island, and a small presence in Australia. Its core business activities include rural supplies, financial services, wool services, livestock trading services and seed and grain products.

Wrightson is a national rural servicing company with rural and horticultural supplies, wool services, livestock trading services, seed and grain products, agricultural research, insurance broking services, real estate services and financial services.

The firms agreed to merge in July and the deal will be put to shareholders in September.

If agreed, the company will trade as PGG Wrightson.

The planned merger follows a period of consolidation in the rural services industry, which last year saw Wrightson out-bid PGG for control of listed Hawke's Bay stock and station company Williams and Kettle.

Wrightson is 50.01 per cent owned by the Craig Norgate-led Rural Portfolio Investments, while Pyne Gould Corporation (PGC) owns 55.4 per cent of PGG.

Both key shareholders have indicated that they support the merger proposal in principle. They will hold 22 per cent and 30 per cent respectively in the merged company.

- NZPA