Singapore's Olam widens NZ dairy interests

Wednesday 2nd September 2009

Olam International, the Singapore-based food commodities group, acquired 14% of NZ Farming Systems Uruguay, adding to its holding in Open Country Cheese.

Olam bought 35 million shares at 41 cents apiece from Australia’s Hunter Hall Investment Management, according to a substantial security holder notice to the NZX late yesterday. Farming Systems climbed 4.3% to 43 cents on the NZX today. Shares of Olam were at S$2.47 on the Singapore Stock Exchange yesterday and have soared 100% in the past six months.

The Singaporean group is taking advantage of the slump in Farming Systems stock from about $1.60 a year ago, as weak world prices for milk, drought and difficulty in accessing credit markets hampered its South American expansion, resulting in a net loss.

Chairman Keith Smith last week said while uncertainty remains over milk prices, “present expectations are for gradual improvement over the course of the coming year.”

The price of milk powder jumped more than 24% in Fonterra Cooperative Group's online auction this week, bringing its two-month gain to 55% and prices for dairy products revive from their lows in February.

Olam last year acquired 25% of Dairy Trust, the owner of cheese maker Open Country Cheese, which has battled Fonterra for its rights to supplies of raw milk.Meat processor Affco Holdings owns 44% of Dairy Trust.

Olam, which operates an integrated supply chain for 17 agricultural products and food ingredients in 60 countries, has been in acquisition mode in the past 12 months, buying US tomato processor SK Foods in June for US$39 million and Argentina’s biggest peanut shelling business in February for US$7 million.

Temasek Holdings, which has a holding in GuocoLeisure, the company once known as Brierley Investments, owns about 14% of Olam. Kewalram Chanrai Group owns 36.7% and managers of Olam hold about 16%.

Businesswire.co.nz

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