PGW - PGG Wrightson

[Snoopy]

$2.80 bid - if it's BAIC buying, they are showing their hand.

If it's not BAIC, then BAIC/Agria deal could be very close.

Closed at $2.87 but on tiny volume of just 5151 shares traded all day. Looks like the largest parcel was something like 200 shares, so likely all the trading was Sharsies' speculators. Don't read into trading prices what you want to see. If there is an offer my pick is it will be pitched at $2.75, which was an above market price when it was accepted by the Cushings for their stake. The Cushings were not forced sellers. You really think the Cushings would leave 20% on the table a couple of months down the track? Winston might have a say on such a 'strategic asset' passing to the Chinese as well. But maybe he wouldn't object to a parcel of shares passing from one Chinese shareholder to another. A below market bid at $2.75 would achieve that and the rest of the NZ shareholders could stay on the register.

SNOOPY

[Balance]

Closed at $2.87 but on tiny volume of just 5151 shares traded all day. Looks like the largest parcel was something like 200 shares, so likely all the trading was Sharsies' speculators. Don't read into trading prices what you want to see. If there is an offer my pick is it will be pitched at $2.70, which was an above market price when it was accepted by the Cushings for their stake. The Cushings were not forced sellers. You really think the Cushings would leave 20% on the table a couple of months down the track? Winston might have a say on such a 'strategic asset' passing to the Chinese as well. But maybe he wouldn't object to a parcel of shares passing from one Chinese shareholder to another. A below market bid at $2.70 would achieve that and the rest of the NZ shareholders could stay on the register.

SNOOPY

Disagree.

Stated before and will state again - BAIC paid $2.75 ,well above market in order to secure just 7 % of the stock.

Agria are not fools - their 44% delivers control so commands a healthy control premium.

And Agria are not forced sellers now - PGW is actually a great investment so no big hurry to sell without control premium.

Plus, if BAIC is looking to make a bid at under $2.70 - why would they have been buying on market at above $2.70? Rather dumb and counter-strategic, don’t you think?

It’s very clear Agria is wanting a much higher price and the market action reflects that reality.

[Snoopy]

Pretty dismal milk price forecast for next season, $5.60 or something? Did REL need to sell to shore up their own balance sheet?

How quickly things can change in the 'wholesale milk price' auction from my above 17th April 2020 post.

From:

https://www.nzherald.co.nz/business/...ectid=12346307

"The GDT price index jumped by 8.3 per cent - its biggest lift since November 2016 and the fourth consecutive gain at the twice-monthly auction.
WMP prices - which have the biggest bearing on Fonterra's farmgate milk price - leapt by 14 per cent to US$3208 a tonne and back to where they were in late January of this year."

IMO the jump in the PGW share price over the last two days can be better explained by the suddenly improved forecast position of dairy farmers. Of course there is no guarantee this price rise will last. Dairy farmers are not really benefitting yet. Peak milk production months are October and November. But it is certainly a positive signal, that it looks like the 'Sharesies' crowd has taken to heart.

The volume in the 'breakout' above $2.70 is tiny. Less than 20,000 shares traded over two days. Largest single sale under five grand. Not even an economically marketable parcel at full service broker rates.

Disagree.

Stated before and will state again - BAIC paid $2.75 ,well above market in order to secure just 7 % of the stock.

Agria are not fools - their 44% delivers control so commands a healthy control premium.

And Agria are not forced sellers now - PGW is actually a great investment so no big hurry to sell without control premium.

Plus, if BAIC is looking to make a bid at under $2.70 - why would they have been buying on market at above $2.70? Rather dumb and counter-strategic, don’t you think?

BAIC have not confirmed any on market purchases above $2.70. The last disclosure on 30th June was for trades between 28th April and 29th June. At no stage during that period did the on market price rise above $2.70. I misremembered the Cushing buyout price as $2.70. As you point out it was actually $2.75. All the confirmed BAIC market action so far would be consistent with a BAIC bid being pitched at $2.75.

Rural Equities Limited were certainly not forced sellers when they unloaded their shares at $2.75. There was no need for them to sell as they had just cashed up their Australian listed investment as well. The only investment that REL has made of late that has stuck is buying back their own shares. There was/is absolutely no pressure on them to do this. Why would REL sell out of PGW if they thought a bid for the whole company was imminent at a significantly higher price? More likely David Cushing was given advance knowledge of any ceiling price that BAIC would pay and sold to get his cash early while the plebian shareholders are forced to wait for any real bid at the same price later.

It’s very clear Agria is wanting a much higher price and the market action reflects that reality.

Of course Agria would like a much higher price, but the rules for business acquisitions have changed.

https://www.tvnz.co.nz/one-news/new-...vid-19-fallout

"A new emergency notification regime will mean the Government needed to be notified of certain investments with a controlling stake in an existing business or business assets. The Government would then "consider whether they are contrary to New Zealand's national interest". If it decides it goes against national interests, the Government can impose conditions or block the transaction."

If BAIC make a bid and are refused under a national interest test, then Agria may end up accepting a much lower price for their stake than is available on the market today. They may have to place their stake among multiple institutions at a discount. I wonder if that is why David Cushing sold out early? Cushing is far too canny to miss out on an easy profit. Perhaps he foresaw the government stamping on a potential takeover deal as a significant risk?

SNOOPY

[Agrarinvestor]

Hi, still owning 70.000 ordinary shares of AGRIA. Agria has not been helpful in finding a solution for teir remaining shareholders? Is there perhaps a manager at BAIC that i should add into the email list?

[percy]

This appears on their substantial shareholder notices.
Additional information
Address(es) of substantial product holder(s): Rm2912 Shun Tak Centre, West Tower, 200
Connaught Road C., Hong Kong
Contact details: Tammy Mok, tammy@bidco.com.hk, +852 31018512

[Balance]

Hi, still owning 70.000 ordinary shares of AGRIA. Agria has not been helpful in finding a solution for teir remaining shareholders? Is there perhaps a manager at BAIC that i should add into the email list?

Learnt the lesson the hard way over the years - don’t buy the cow when you only want some of the milk.

[Balance]

Of course Agria would like a much higher price, but the rules for business acquisitions have changed.

https://www.tvnz.co.nz/one-news/new-...vid-19-fallout

"A new emergency notification regime will mean the Government needed to be notified of certain investments with a controlling stake in an existing business or business assets. The Government would then "consider whether they are contrary to New Zealand's national interest". If it decides it goes against national interests, the Government can impose conditions or block the transaction."

If BAIC make a bid and are refused under a national interest test, then Agria may end up accepting a much lower price for their stake than is available on the market today. They may have to place their stake among multiple institutions at a discount. I wonder if that is why David Cushing sold out early? Cushing is far too canny to miss out on an easy profit. Perhaps he foresaw the government stamping on a potential takeover deal as a significant risk?

SNOOPY

PGW is already overseas owned between Agria & offshore institutions and BAIC.

And you read it here - paying $3.25 to takeover PGW is hardly buying NZ assets on the cheap, which is the primary intent of the new emergency notification regime!

https://www.minterellison.co.nz/our-...id-19-pandemic

"This power is intended to stop vulnerable New Zealand assets being subject to foreign takeover during the economic fallout of the pandemic. Once in force, the power will be reviewed every 90 days and will only remain in place while the COVID-19 pandemic and its associated economic impacts continue to have a significant effect in New Zealand."

[Balance]

Rural Equities Limited were certainly not forced sellers when they unloaded their shares at $2.75. There was no need for them to sell as they had just cashed up their Australian listed investment as well. The only investment that REL has made of late that has stuck is buying back their own shares. There was/is absolutely no pressure on them to do this. Why would REL sell out of PGW if they thought a bid for the whole company was imminent at a significantly higher price? More likely David Cushing was given advance knowledge of any ceiling price that BAIC would pay and sold to get his cash early while the plebian shareholders are forced to wait for any real bid at the same price later.

SNOOPY

And there is now no pressure for Agria to sell out unless it gets the price it wants for a strategic stake which transfers control. The dividend yield is fantastic (>5%), one of the few NZ companies to pay and maintain the payment of dividends and globally, certainly a high yielder much in demand by the unprecedented super low yield interest rate environment.

PGW now is a financially sound and well managed company in arguably the salvation industry for NZ in the covid-19 economic environment. What is there not to like for Agria to hold on?

[Norwest]

All but one seller below $3 ($2.96) has been bought out.

Looks like it is heading to $3 and higher again very soon.

[Agrarinvestor]

@Percy, thanks for the information
"Contact details: Tammy Mok, tammy@bidco.com.hk, +852 31018512"