Feb. 14, 2019
PGG Wrightson chief executive Ian Glasson with Paul Wright of Wrightco near Sheffield, Canterbury.
The Commerce Commission has given Danish company DLF Seeds clearance to buy PGG Wrightson's seeds business.
Last year PGG Wrightson - the country's leading seeds merchant - agreed to sell its seeds business for $434 million, subject to Commerce Commission and Overseas Investment Office approval.
It is unclear whether the Overseas Investment Office has yet given the sale the green light.
The Commission said on Wednesday that in considering the acquisition, the Commission focused primarily on the effects on the production and supply of ryegrass seeds, in particular those containing novel endophytes. An endophyte is a fungus which grows in a symbiotic relationship with the grass, making it more resilient to certain pests.
Deputy Chair Sue Begg said the Commission was satisfied the acquisition would not be likely to substantially lessen competition in any of the markets it assessed.
"DLF is not at present a close competitor of PGG Wrightson Seeds in respect of ryegrass seeds containing endophytes, and is unlikely to be so in the future," Ms Begg said.
"Further, the merged entity would continue to be constrained by Barenbrug Agriseeds, and a number of smaller competitors."
Late last year PGG Wrightson shareholders voted to sell by a margin of 96.9 per cent support.
But deputy chairman Trevor Burt at the time conceded job losses, restructuring and a lower share price were inevitable as the company downsized from a $1.2 billion to an $800m business once its seed business was sold.
Burt said it would still be the leading New Zealand rural services supplier with 2000 staff and 94 stores.
"But we will need to cut our cloth to match the business that is left. We are just starting to work on the right structure and operating model for that business, working on the assumption the sale becomes unconditional." This would include a review of management structure and company board.