Zuellig approach lacking in substance - PGG Wrightson

Takeover target PGG Wrightson says an approach by Hong-Kong-based conglomerate Zuellig Group appears designed to frustrate an existing bid for control by Chinese suitor Agria Corp.

This morning PGG Wrightson said it received a letter from Zuellig yesterday reiterating its desire to purchase a cornerstone 19.9% stake in the local rural servicing company.

The letter also outlined a “range of other potential transactions” but did not indicate any pricing or any other terms of a potential offer, PGG Wrightson said.

Zuellig, which is owned by the Zuellig family of Switzerland, had previously told media that while it was primarily interested in buying a cornerstone stake in PGG Wrightson it was also interested in joining a consortium that might look at making a partial takeover offer. 

However, PGG Wrightson said it considered the approach was more to do with trying to prevent a 60c-a-share offer from Agria Corp (Singapore) and New Hope Group of China. 

“To date, the approach from Zuellig seems to have a primary motivation of frustrating the Agria offer."

PGG Wrightson’s independent directors have recommended the Agria/New Hope bid in the absence of any competing offer, although the company did indicate in its target company statement that some shareholders with a long term bent may feel short changed by the 60c-a-share offer.

PGG Wrightson said today the approach by Zuellig lacked substance.

In the absence of further details, PGG Wrightson was not able to recommend that shareholders take the possibility of an offer from Zuellig into account when considering their response to the Agria offer, which expires on April 15.

“The independent directors will promptly advise shareholders should this position change,” PGG Wrightson said.

Zuellig executive Peter Williams recently told NBR the group was serious about making a strategic investment in the company and not simply on a tyre kicking exercise while trying to prevent Agria getting control. 

He said Zuellig had already looked over PGG Wrightson in late 2009 when it was raising capital, a process that saw Agria take up a 13% shareholding, which it later increased to 19%.

“We liked what we saw in the company,” Mr Williams said. “But we were concerned with corporate governance and issues of that ilk and we disengaged very quickly.”

“This time around it’s very much based on what we see as a strategic acquisition. I don’t think we should posture ourselves as preventing Agria taking control if that’s what shareholders want.

“But I do think it’s beholden upon us to stand up and say have you really thought this through? Because in absence you are going to pass control over and that will be it. There’s no second chance.”