New Zealand-After the meat merger failed.

NEW ZEALAND-AFTER MEAT MERGER FAILURE.

The two big players in New Zealand agriculture have reached a settlement through mediation following the default by PGG Wrightson on a proposed $220m merger with Silver Fern Farms last year.

PGG Wrightson (PGGW) will provide Silver Fern Farms (SFF) with a mix of cash and PGGW shares.

The financial terms of the settlement were $25 million paid by PGGW on April 24 in addition to $5 million paid previously, of which $3.5 million was for costs incurred by Silver Fern Farms.

The meat processing co-operative will also receive 10 million ordinary shares in PGGW as part of the settlement package.

The companies said in a press statement they would continue to work on initiatives to integrate the supply chain from plate to pasture to improve the strategic position of pastoral farmers.

The settlement was welcomed by PGGW chairman Craig Norgate and Silver Fern Farms’ chairman Eoin Garden as a successful resolution with which the boards of both companies could be well satisfied.

"I am delighted that both companies will now be able to put the disappointment of last year’s events behind them," Mr Norgate said. "For PGG Wrightson, the settlement provides certainty over the financial exposure resulting from our inability to complete the transaction approved last year," he said.

"The terms of the settlement have been approved by our banking syndicate and are well within the company’s capacity to manage financially.

"The settlement also establishes the basis on which both parties can continue to work in their respective clients’ interests under an integrated supply chain model," Mr Norgate said.

Mr Garden said the settlement was a sensible and pragmatic outcome for "New Zealand Inc."

It provided significant redress to Silver Fern Farms for the damages arising from PGGW’s inability to complete the 2008 transaction, he said.

Mr Garden said Silver Fern Farms intended to remain a long-term shareholder of PGGW.