PGG Wrightson acquires Nexan Group for $20 million
Photo:
Supplied
Rural services company PGG Wrightson has acquired local animal health company Nexan Group for $20 million in a move the listed company says will keep production of key farm products in New Zealand.
PGG's wholesale trading division Agritrade has been the exclusive distributor of Nexan Group's animal health remedies like veterinary and livestock pharmaceuticals for more than a decade, and the range has also been sold in the company's retail stores.
Nexan and Vet Direct comprised the Nexan Group, that sold products under own brand Vetmed and other brands Active+, Cervidae, Farma and CentraMax, after being established more than 13 years ago.
PGG Wrightson chief executive Stephen Guerin said it wanted to bring value and innovation to farmers, something the Group and its brands like Vetmed will help achieve.
Stephen Guerin
Photo:
Supplied
"We're very excited by this opportunity. They've been good partners to our business and now they're part of the family," he said.
"Our idea is to create value for the business and then create value for our farmers through product innovations, which are very much core to our strategy in terms of our science and innovation we try to bring to the market place."
He said Nexan was a strong and respected name in New Zealand's agricultural landscape.
"This acquisition is not just about growth, it is about ensuring New Zealand farmers have access to locally-developed and produced products that drive profitability and sustainability on-farm."
Guerin said New Zealand's size sometimes posed challenges in bringing new innovations to market.
An example was the development of a treatment to control gastrointestinal parasites in deer, the cervidae product, which multinational companies were not looking at, he said.
"Thinking about the challenges that can arise in the animal health space has been a bit problematic, because the multinationals don't always respond as quickly as they need to," said Guerin.
He said it would not make "too many changes" in the operational sense as it wanted Nexan to remain nimble and responsive to the market place.
"Our ownership will mean that they've got access to capital and access to the distribution network on an ongoing basis, so we think that's a win-win for both organisations."
In the six months to December, the company recorded a net after-tax profit of just under $16 million, due to
good market signals
in livestock and rebounding rural realty.
It followed a
"challenging" year to June
, when
the company recorded a $3.1m profit
, down $14.5m on the financial year prior.
Nexan's current owners and directors, Gary Harrison and Jon Petherick, said jointly on the NZX on Monday afternoon, it seemed like a "natural progression" of the "strong and positive" relationship between the two companies.
"Joining PGW marks an exciting new chapter for Nexan, one that will allow us to continue building on that legacy with even greater reach and capability, while staying committed to innovation and serving rural communities."
The current directors and their team of five will continue in their operational roles.
The transaction is expected to settle later this month.
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