Pyne Gould to expand rural empire

Friday 15th June 2001

By Chris Hutching

Booming rural fortunes are behind the plans by Pyne Gould Corporation to merge with, or more realistically take over, listed Otago rural servicing company Reid Farmers, of which it already has 44%.

While city folks have yet to see many of the benefits from soaring farm incomes, it is a different story in provincial centres where Pyne and Reid Farmers ply their stock and station services and where farmers have been spending up large.

The talks between the two companies are at an early stage and may involve a scrip offer for the 56% Pyne does not own.

About a third of Pyne business is now in stock and station operations, with the bigger-earning trustee and financing subsidiaries providing the bulk of its income and accounting for about $660 million of assets.

Just before Christmas Pyne nearly doubled its financing division with the purchase of Auckland finance company Marac for $41 million and Dunedin-based Frontline Finance from John Gilks for $20 million.

It simultaneous bid for the remaining 49% of listed cashbox South Eastern Utilities. These moves follow the merger last year of two other of Pyne's finance companies, Allied Finance and Finance & Discounts, and the enlarging of the Auckland operations of those companies.

In the year ending June 2000 Pyne's after-tax profit excluding one-off items was $12.2 million on a turnover of $210 million. Shareholders received a total dividend for the year of 16c a share.

The takeover of Reid Farmers would double Pyne's stock and station operations and leave Wrightson as the remaining rival in the south. Commerce Commission approval may be required.

Reid Farmers has posted a "don't sell" notice pending further talks. It reported an after-tax profit for the six months ending December 31 up 62% to $2.7 million.

Reid Farmers shares rose from $1.10 to $1.26 on the takeover news.

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