The vote was virtually 97% in favour at the rural services group’s annual meeting in Christchurch.
It was the first of several conditions required to be met for the sale to proceed.
On a wet day there wasn’t a big turnout of shareholders so the outcome was set by heavy support from proxy votes filed ahead of the meeting.
Max Smith, of the Shareholders Association, argued against the sale, saying seeds is the major part of the business.
A sale would result in royalty payments on intellectual property and proprietary seeds being lost from New Zealand and leave a much smaller business vulnerable to negative impacts from issues such as Mycoplasma bovis and Government restrictions on irrigation development.
Wrightson deputy chairman Trevor Burt said royalties will not be lost. They will continue to come back to the NZ research and development joint ventures involving PGW seeds and Crown agencies for investment in further research.
The remaining business will be very substantial with revenue of $800 million a year and more than 2000 staff and very good operating and growth prospects.
Chief executive Ian Glasson does not expect M bovis to have a significant impact on PGW’s livestock agency business because it is well set up for online trading if farmers move to avoid sale-yards transactions.
The livestock and the other big remaining division, water and retail, are outstanding businesses resilient to headwinds.
The sale is being made as part of a strategic review of the business and the directors have said a tax-free return of capital of up to $292m could be made to shareholders.
Smith asked Burt what the remaining business will be worth if that happened and 30c a share is paid out.
Burt said he could not speculate on that but, by his estimate based on the share price of 58c, if something like 38c or 35c a share is paid out that could leave a theoretical share price of 20c, which would undervalue the business.
“We’d have operating earnings of $35m a year and 20c would undervalue that. We’ve got good growth options.”
Wrightson also needs competition regulator approvals in NZ, Australia and South America, joint-venture partner agreements and Overseas Investment Office approval for the sale.
There is not a lot of market overlap between PGW seeds and DLF to suggest competition issues should hold back approvals, Burt said.
The directors are continuing their review and will focus on the level of corporate overheads, capital requirements and governance issues for a business without the seeds entity.
Glasson said October trading picked up after a slow first quarter to the financial year and he expects operating earnings (Ebitda) of about $70m for the year ending June 30, about the same at last year.
He described that as a strong result and another good year is expected.
If the PGW seeds sale proceeds that will change the earnings.
But it is too early to accurately forecast after-tax earnings for the year though a seeds sale will add about $120m of net capital gain to the overall figure.
