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Potential new bidder for PGG Wrightson

Friday 4th February 2011

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Federated Farmers is questioning the depth of New Zealand's capital markets after a potential second foreign bidder emerged for rural services firm PGG Wrightson.

PGG Wrightson, already the target of a partial takeover bid, said it has received an approach from another party which indicated an interest in a full takeover offer.

Just before Christmas, China-based Agria Corp launched its $141 million partial bid to lift its stake in PGG Wrightson to 50.01 percent from the 19% it held before the bid.

Today a committee of the PGG Wrightson board said it had agreed to a request from another party to carry out due diligence on the company.

The party had indicated an interest in making a full takeover offer for PGG Wrightson and was a "bona fide potential bidder", the PGG Wrightson committee said.

PGG Wrightson shares soared 12.73 percent to 62 cents today, which is above the 60c offered by Agria.

Given the potential for another offer to emerge, the committee recommended shareholders wait until nearer the close of the Agria offer period - currently April 15 - to make a decision on the Agria partial takeover offer.

"Any takeover situation is dynamic and this means that circumstances could change materially before the nominated offer closing date," the committee said.

Federated Farmers said it is considering media reports that Canadian agricultural giant, Agrium, may be the latest suitor.

"We're watching these overtures for PGG Wrightson because the maintenance of competition is a must," says Philip York, Federated Farmers economics and commerce spokesperson.

"We want New Zealand's farmers to have the most cost effective rural services sector possible. The fact the suitors are Chinese and Canadian again raises big questions over the depth of New Zealand's capital markets."

Agrium already owns 50% of rural services company RD1 and it acquired Australia's AWB last August.

"Simply put, it's a major player in Australia," York said.

PGG Wrightson is to issue its target company statement in response to the Agria offer on Monday.



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