Independent directors in PGG Wrightson have recommended shareholders accept a partial-takeover offer from its largest investor Agria.
But investors are advised to wait until April before accepting, in case a better offer emerges from an unnamed party, thought to be Agrium, a Canadian rural services company.
An appraisal report by Grant Samuel values PGG Wrightson at 53 cents - 65c per share. It says Agria's offer of 60c compares favourably with recent deals for comparable companies.
PGG Wrightson directors says while the offer may suit some investors, others may conclude the bid undervalues the company's longer term prospects.
The company's underlying performance is expected to pick up as rising global demand for commodities eventually affects cuts farmer debt and boosts rural property prices.
Last week, PGG Wrightson said it had approached by an unnamed party that was considering making a full takeover bid.
The independent directors say another bid may cause them to change their recommendation.
Agria is already holding acceptances giving it about 40% of PGG Wrightson, including those of its second largest shareholder, Pyne Gould Corporation, and Sir Selwyn Cushing's investment vehicle, H&G.
PGG Wrightson's shares fell 2c to 60c each on Monday.
Tough trading conditions
Meanwhile, PGG Wrightson says tough trading conditions in the farming sector have hit its half year earnings.
The company lost $5.9 million in the six months to December, a turnaround from a profit of $4.3 million in the same period a year earlier.
The company is sticking with an earlier forecast of full year gross earnings of between $58 - $61 million.
In December, the company warned its profit would fall to between $15 - $18 million in the year to June, compared with $23 million the previous year.