I am interested to read that article in the context of the rumoured split in the Seed / Rural Supplies business, that looked all on before Mark Dewdney introduced the 'One PGW' philosophy. I see "CK Life Sciences" based in Hong Kong is said to be interested in PGG Wrightson's seeds business. I wonder if they were the party that Alan Lai had in mind when he brought up the idea of carving out the seed business all those years ago?
I haven't done the exact maths. But with the controlling stake of 37% bought for 60cps and the initial stake of 13% bought for $36m (over 754.8m shares on issue, this means the equivalent of 0.13 x 754.8m = 98.1m 'post capital reconstruction' shares were bought) maybe Alan Lai might get his money back in a bidding war for PGW? Of course there is no guarantee that the required offer to all shareholders would be at a market premium. I don't follow them closely. But my memory of those touted Australian 'suitors', particularly Elders, is that they are not in a strong financial position to make a PGW bid!
SNOOPY
Last edited by Snoopy; 16-03-2018 at 11:42 AM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
Here are some estimates of losses based on the only information I have seen which is that 556 farms are involved.
How much of that PGW will be liable for I do not know.
556 farms at say 10 hectares each = 5560 hectares.
Average crop 15000 kg dry matter per hectare worth 40 cents a kg fed to a dairy cow = $33.3 million worth of crop
Since it is not suitable for dairy cow feed the value of the crop is likely halved giving a loss to farmers of $16.7 million.
Here is more info on the swede problem.
A lot more hectares than I guessed in February.
No more clarity on the cost to PGW . It could be after winter before farmers know their actual losses and can finalize a claim.
Punters loving that rumour about Elders ...must be going to happen
What price ... 80 cents
I ran a preliminary ruler over PGW using EBITDA multiples and came up with a price of 70c, including a 20% premium for control. Take away the takeover premium and I got a fair value of 56c. You have to remember that PGW is at the peak of its earnings cycle, so the earnings multiple used would not be as great as some think.
I figured private equity wouldn't be interested because all the family silver has been sold and PGW is already loaded with debt. I thought Elders might be stretched to do a takeover because of their own problems in the not too recent past. However, I looked at the chart for the last five years and it seems Elders has been a ten bagger over that time! Not sure how that slipped under my radar. Even the current Elders debt burden seems modest. So maybe an Elders takeover could be on?
SNOOPY
discl: PGW holder
Last edited by Snoopy; 11-05-2018 at 02:36 PM.
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Looking for a fast and easy feed, at least a 20% profit...must be a trait of all hounds Best not tell anyone the economy is looking like tanking into a recession eh
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
Looking for a fast and easy feed, at least a 20% profit...must be a trait of all hounds
More like a chance at a quick fortune after slumbering for twenty years in the waiting room kennel Beagle! Ok my average hold time isn't that long. But I bought to lap up the dividends, not to make a quick buck. In many ways I will be annoyed if a takeover offer comes as it is hard to get dividend yields like this. But I will probably accept, if such an offer comes at a premium (there is no guarantee of that of course!), as at 66c and above I think PGW is very fully valued.
Best not tell anyone the economy is looking like tanking into a recession eh
Have you noticed that often agricultural shares don't follow the rest of the economy? This was another reason for holding what some may see as a serial underperformer. PGW actually smoothes out my portfolio returns!
SNOOPY
Last edited by Snoopy; 12-05-2018 at 11:52 AM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
Originally Posted by winner69
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Best not tell anyone the economy is looking like tanking into a recession eh 
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