PGG Wrightson is selling its finance arm for $100 million and will concentrate on providing agricultural goods and services to farmers.
The buyer is Heartland Building Society, which will take over most of its loan book and boost its asset base to $2.6 billion.
PGG Wrightson says that selling its finance arm will bolster its financial position, though it will hold onto about $96.5 million worth of loans and work to realise or refinance these over the short to medium term.
Chairman Sir John Anderson says PGG Wrightson is focussing on its core business.
''We've really done a clean-up here,'' he said.
Farmers will still have the option of getting finance along with their seeds and other agricultural products, with Heartland retaining the PGG Wrightson Finance brand and working closely with PGG Wrightson.
Heartland will pay for it by raising at least $55 million from a share placement and share purchase plan.
Chief executive Jeff Greenslade says the acquisition will increase Heartland's asset base in the rural sector from 5% to around 23%.
He says the purchase will enable the company to achieve its strategic plan quicker.
Mr Greenslade says the company will report a modest profit between $6 - $8 million for the year to the end of June and expects its combined business profit to be in the range of $20 - $24 million in 2012.
PGG Wrightson and Pyne Gould Corporation have each agreed to buy $10 million worth of Heartland shares at 75 cents per share.
The deal needs investor approval, which is expected at the end of August.
