OIO clears $434m PGG Wrightson deal

Once the deal is done, the slimmed down PGG Wrightson will consist of stock agency, retail and water rural services based entirely in New Zealand.

PGG Wrightson's sale of its seeds division to Denmark based co-operative DLF Seeds has cleared its final hurdle with the Overseas Investment Office granting its approval.

Deputy chairman Trevor Burt said the $434 million deal could settle at the end of the month or in May.

He said the net sale price was $413m, after taking into account net debt of $21m.

"After the sale proceeds are received on settlement and debt repaid, PGW would expect to have a cash surplus of circa $210 million (subject to transaction completion timing, working capital requirements that can fluctuate materially through the annual cycle and other transaction wash-up items)," he said.

"Following settlement of the Seed and Grain transaction we would expect to report a capital gain on sale in excess of $120 million, which will flow through to net profit after tax. The options for a capital return to shareholders being contemplated by the board would allow PGW to reset its debt position and right-size its corporate operations for the business going forward." Mr Burt said.

Chief executive Ian Glasson said he was excited about the partnership.

"Our immediate focus will now move to completing settlement and ensuring a smooth transition to the separate business structures."

Once the deal is done, the slimmed down PGG Wrightson will consist of stock agency, retail and water rural services based entirely in New Zealand.

On Monday, PGG Wrightson announced a board reshuffle with David Cushing among the incoming directors.

Burt and independent directors Bruce Irvine and John Nichol will retire on April 30 and be replaced by Cushing, Rodger Finlay and Sarah Brown. The three appointees are deemed to be independent directors.

Finlay, who is deputy chair of the Cushing-controlled farm manager Rural Equities, will assume Wrightson's chair. He replaces Agria representative Joo Hai Lee, who will be Finlay's deputy.

H&G, the Cushing family's investment vehicle, bought a 2.2 per cent stake from Agria last week, adding 17 million shares to its existing stake of 3.1 million shares. That equates to about 2.7 per cent of Wrightson's shares on issue.

PGG Wrightson shares last traded at 52c, valuing the company at $392m.