Olam launches NZ Farming Systems counter-offer

New Zealand Herald | Tuesday Aug 24, 2010

Olam International raised its offer for NZ Farming Systems Uruguay to 70 cents from 55 cents a day after the target company disclosed a third bidder is looking at the dairy farm developer.

Shares of Farming Systems jumped 11 per cent to 70 cents after Olam's statement.

The new offer is within the independent adviser's valuation range of 65 cents-to-79 cents a share.

Net tangible assets were 92 cents, according to its 2010 accounts.

Olam, a Singapore-based food agri-business has said Farming Systems hasn't been well managed, a claim the target company disputes, and needs capital to complete its expansion.

Its offer last month of 55 cents was a price the shares hadn't reached since May 2009.

Uruguay's Union Agriculture Group subsequently offered 60 cents and yesterday Farming Systems urged shareholders not to sell into either offer pending news of a third group interested in making an investment without seeking control.

Farming Systems yesterday reported a full-year loss of US$10.4 million and chairman John Parker said while the model of setting up a New Zealand style, grassland-based dairy farming structure in Uruguay was sound, the structure and performance of NZFSU hadn't been good enough.

NZFSU has been looking for additional funding to increase irrigation levels from about 3200 hectares to over 10,000 hectares, as well as boost soil fertiliser levels on land that in many cases has never been top-dressed.

- BusinessDesk