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October 17, 2009

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Agria set to buy 13% in NZ firm

CHINA'S seed and agriculture researcher Agria Corp is to buy a 13-percent stake in New Zealand's largest rural services business PGG Wrightson, with the aim of becoming a cornerstone shareholder, the companies said yesterday.

The two companies signed an agreement for Agria to invest NZ$36 million (US$27 million) in PGG Wrightson through a share placement and to form a strategic partnership.

Agria's investment was conditional on it being satisfied that sufficient funds would be raised through equity raising and other sources for PGG Wrightson to repay a US$149 million debt facility by March 31.

A China-based agricultural solutions provider listed on the New York Stock Exchange, Agria is engaged in research and development, production and sale of upstream agricultural products.

The companies said the partnership would cooperate on development and international commercialization of seed cultivars, development of livestock demand in China, exports of livestock from New Zealand, Australia, South America and other markets, and on establishing livestock trading systems in China using PGG Wrightson's auction expertise.

"Both parties' aspiration is (for Agria) to become a significant shareholder in PGG Wrightson over time," they said in a statement.

PGG Wrightson Chairman Keith Smith said the cooperation agreement "will provide a framework in which intellectual property, management know-how and financial resources can be deployed jointly and for mutual benefit."

"PGG Wrightson has for some time been looking to establish a strategy and business platform for entry into China," Smith said.

"This agreement and the relationship with Agria will enable that aspiration to be met," he added.


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