The Danish multinational grass and forage crop specialist DLF Seeds has agreed to acquire PGG Wrightson Seeds, the southern hemisphere’s market leader in forage and turf seeds, subject to regulatory clearances. It says the “significant strategic leap” will make DLF a “truly global” business.
PGG Wrightson Seeds (PGW Seeds) is a division of the New Zealand-based agribusiness PGG Wrightson (PGW), in turn majority owned by the Hong Kong-registered Agria Corporation. The seeds business is active in New Zealand, Australia, Uruguay, Argentina and Brazil.
Agria said the divestment follows a strategic review over recent months, with directors continuing to “explore options for PGW’s business, growth opportunities, capital and balance sheet requirements and shareholding structure”.
DLF Seeds will pay NZ$421 million and assume and repay NZ$18m in debt for a 100% shareholding in PGW Seeds Holdings and “substantially all the assets and operations of the PGW Seed and Grain business in New Zealand, Australia, South America and internationally”. In addition, PGW and PGW Seeds will enter into a long-term distribution agreement for seed and grain, with the former granting a brand license to PGW Seeds for the continued use of the PGG Wrightson Seeds brand.
PG Seeds contributed $NZ37m in earnings and $NZ372.7m in sales to PGW’s 2017 Group earnings of NZ$46.3m and revenues of NZ$1.13 billion. Other Group activities include livestock and wool trading, agricultural supplies and water. PG Seeds breeds and markets forage crop, brassica and cereal seeds, as well as turf seed. It has 600 employees; half in New Zealand and the rest are evenly distributed between Australia and South America.
DLF’s latest full year profit was DKK161m (NZ$37.03) on sales of DKK3.53bn (NZ$812m).
“We see PGG Wrightson Seeds as the leading temperate forage seed player in the southern hemisphere, with DLF occupying a similar position in the northern hemisphere,” says DLF chief executive Truels Damsgaard. “We see real opportunity for value creation as a combined business with a strong global offering for our customers.”
“PGG Wrightson Seeds and DLF operate complementary businesses in terms of market coverage and distribution capabilities geographically. The combined business will gain such critical mass that will allow continued investments into research and product development at the highest level. To stay ahead of the competition, it is of outmost importance to gain scale in your business, as applied biotechnology is expensive and long term to develop and not without technology risks.
“With this acquisition DLF not only achieves such scale, we also gain a strong supply chain and market coverage in the southern hemisphere, which positions DLF uniquely in the global forage and turf seed space,” Mr Damsgaard concluded.
For PGG Wrightson, chief executive Ian Glasson adds: “The Seeds business will benefit from being part of a truly global company with a diversified offering. Meanwhile PGG Wrightson Rural Services will continue its strategic partnership with Seed and Grain, and remain the leading New Zealand rural services company.