PGG Wrightson is selling its half-share in New Zealand Merino for $7.625 million, putting the company totally in the hands of its grower shareholders.
The rural services company announced the conditional sale to Merino Grower Investments Ltd (MGIL) yesterday.
MGIL chairman Bob Brown said it had been a "long-held dream" by merino growers to secure ownership of the strategic direction and future of the business that marketed their wool.
MGIL had "kept the pressure on" and made no secret of its desire to take ownership of the company.
The sale was conditional on MGIL shareholder approval and he was confident that would be achieved. Once confirmed, it was expected settlement would take place by June 30.
Mr Brown believed the move was very significant for the merino industry, saying it would further strengthen the businesses of merino growers and it was "too good an opportunity to miss".
The management of New Zealand Merino had decided to invest in the business and drive an operation focused on generating value for fine-wool farmers.
"We have a world-class management team and this provides an opportunity for them to be part of the ownership and the future success of the business.
"New Zealand Merino was a market leader when it separated from the old New Zealand Wool Board to form its own entity. The company has developed a reputation for innovation and building strong relationships in the marketplace," he said.
New Zealand Merino pioneered branded contracts with companies such as Icebreaker and Smartwool.
The new ownership structure would ensure alignment of all stake-holders for the benefit of the industry and, with the inclusion of mid-micron growers, there would be a strong platform from which to further develop the value of wool and other products from fine-wool sheep, he said.
The agreement supported the vision of merino growers to determine their own destiny through gaining outright control of the company, PGG Wrightson managing director George Gould said.
MGIL is owned by by 630 merino growers. Shareholders' approval will also be sought to change the constitution to allow shareholding by mid-micron wool growers and New Zealand Merino employees.