Correction: This article has been edited to clarify a gain on the sale of $120m, not $285m as earlier reported. Apologies for the error.

PGG Wrightson has been cleared to sell its seeds business to Denmark's DLF Seeds.

The Commerce Commission said the $434 million transaction, announced in August, was unlikely to substantially reduce competition in any of the markets it assessed.

"DLF is not at present a close competitor of PGG Wrightson Seeds in respect of ryegrass seeds containing endophytes and is unlikely to be so in the future," deputy chair Sue Begg said.

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"Further, the merged entity would continue to be constrained by Barenbrug Agriseeds, and a number of smaller competitors."

Wrightson expected to book a gain of about $120m on the deal and signalled to investors it could return up to $292m to shareholders on completion, either through a buy-back or a share cancellation.

The proposal won almost 97 per cent support at a special meeting in October. The New Zealand Shareholders' Association opposed the transaction, saying the short-term gain for investors was offset by the remaining Wrightson operation being half the size and inferior to the seeds unit.