UPDATE 1-NZ's PGG Wrightson to take 50 pct stake in SFF

(Adds detail, company comment)

WELLINGTON, June 30 (Reuters) - New Zealand rural services firm PGG Wrightson Ltd (PGW.NZ) said on Monday it would pay NZ$220 million ($167 million) for a 50 percent stake in meat producer Silver Fern Farms (SFF).

PGG Wrightson said it would bring increased investment to Silver Fern to target new markets and lift returns as the New Zealand meat industry struggles with lower returns.

The move is expected to save about NZ$60 million a year in the short term, growing to NZ$110 million a year in the longer term, PGG Wrightson chairman Craig Norgate said.

"There are very clear synergies, in terms of cost and performance benefits, that both parties bring to the table," Norgate said in a statement.

Shares in PGG Wrightson, which were earlier placed on trading halt, had not traded by 2320 GMT. The stock closed on Friday at NZ$2.60, having traded between NZ$1.65 and NZ$2.77 over the past year.

Silver Fern Farms, a farmer-owned co-operative, said it needed the increased reach of a larger partner.

"The goal is to lift returns for New Zealand's red meat farmers," chairman Eion Garden said.

PGG Wrightson said the relevant parts of the two companies would work together on a complimentary basis. PGG Wrightson would provide advisory and procurement services, while SFF provides processing capacity, and expertise in technology, marketing branding.

PGG Wrightson, formed when Wrightson Ltd merged with Pyne Gould Corporation, had around 15 percent of the rural services market. It provides retail, finance, livestock and property services to farmers and rural communities. ($1=NZ$1.32) (Reporting by Adrian Bathgate)