New Hope to buy New Zealand firm
Updated: 2011-03-02 17:23
By Hu Haiyan (China Daily)
BEIJING — The New Hope Group, a leading domestic feed producer and agribusiness operator, is cooperating with Zhongshan-based Agria Corp to purchase a 50.1 stake of PGG Wrightson, New Zealand’s largest agricultural services provider.
“The volume of the deal is about $200 million. The deal is waiting for the approvals of the governments of New Zealand and China. If it goes smoothly, it can be done at the end of April,” said Zhang Tianli, a partner of New Hope Group’s Industry Fund.
This is the New Hope Group’s first venture overseas through an acquisition or merger. As early as 1996, the New Hope Group expanded overseas but mostly in the form of operating overseas factories. It operates 12 feed factories in countries such as Vietnam and Indonesia.
The offer was made by Agria (Singapore) Pte Ltd, a company held by Agria and New Hope that currently has a 19.01 percent stake in PGG Wrightson.
Agria, Wrightson’s biggest shareholder, develops corn seed varieties and runs sheep-breeding operations and tree nurseries in China. The company acquired an 11 percent stake in PGG Wrightson in October last year and another 8 percent a month later.
Chengdu-based New Hope’s feed sales volume is 1.4 million tons (meats account for 2 million tons in sales volume). It is estimated that sales revenue has grown by 10 billion yuan last year.
“In the next five years, New Hope Group will build 15 to 20 factories, and it is expected that sales overseas will be more than 2 billion yuan and brings profits of 200 million yuan,” Liu Yonghao, president of the New Hope Group, said at a news briefing in Beijing on Wednesday.
“Our target in the next five years is to build our company into a world-class medium-sized feed producer and agribusiness operator,” Liu said.
PGG Wrightson’s grass seed business ranks first in the southern hemisphere, one of the main reasons for the New Hope Group move. New Hope company representatives said the move is another step toward expanding its agricultural industrial chain.
“The quality of protein is very decisive for animal feed, and the grass seeds of PGG Wrightson are of good quality and very helpful for us to improve our animal feed protein content,” Zhang said.
The offer is conditional on government approvals. New Zealand this week rejected a bid by China’s Natural Dairy Holdings Ltd to buy land assets because the application didn’t meet “good character” criteria. The rejection came after the government in September gave ministers greater power to quash sales of large farm blocks and other sensitive land amid rising concern about foreign ownership in key industries.
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