KEY POINTS:
Rural services supplier PGG Wrightson is boosting its South American presence with the purchase of Uruguayan seed and agrichemical distributor AgarCross from DuPont Argentina.
It is also buying the remaining shares in Wrightson PAS, which will give it full control of the two leading seed businesses in its
increasingly important South American hub.
The double whammy will help the company fuel the growth of its dairy and cattle farming offshoot, New Zealand Farming Systems Uruguay (NZFSU), in which it remains a cornerstone shareholder.
PGG Wrightson chairman Craig Norgate said the AgarCross deal, under which his company becomes the distributor of DuPont agrichemicals and Pioneer branded maize, would significantly broaden the scope of its Uruguayan unit beyond just the seeds business.
"The deal means PGG Wrightson will own the market leaders in Uruguay," he said.
South America has grown in importance to PGG Wrightson in recent years. In addition to Wrightson PAS, which it bought into in 1999, the company acquired a 50 per cent stake in Argentinian seed business Alfalfares last year, and also services some of Chile's seed business requirements.
Norgate said PGG Wrightson was committed to expanding its South American business through smaller acquisitions such as that of AgarCross as well as through NZFSU.
NZFSU should soon have all the land it needed to commence operations, and was in the "final throes" of appointing another couple of New Zealanders to run the business, he said.
PGG Wrightson chief executive Barry Brook said AgarCross' focus on summer crops such as maize and sorghum would complement Wrightson PAS' emphasis on fodder crops such as grasses and legumes.
"It extends the business of Wrightson PAS in a complementary way by giving us a broader product range and it also brings some revenue into the first half of the financial year from the product range."
The deal - the value of which Brook would not disclose - would help extend the company's reach in Uruguay and enable it to service NZFSU, which PGG Wrightson set up last year.
"It'll help the servicing of some of that business."
The latest purchase follows an announcement in June that PGG Wrightson would buy Australian seed distributor Auswest Seeds, which it said would boost business across the Tasman by 20 per cent.
PGG Wrightson's seeds unit was its most profitable business, according to Norgate.
Shares in PGG Wrightson closed down 3c at $1.72.
New Pastures
PGG Wrightson's Uruguay interests:
* AgarCross: Seed and agrichemical distributor.
* Wrightson PAS: High-tech seed company.
* New Zealand Farming Systems Uruguay: Dairy and cattle farming offshoot.
