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Enhanced offer for Farming Systems wins over ACC

Tuesday 24th August 2010

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Olam International will lift its stake in NZ Farming Systems Uruguay to almost 37% after raising its takeover offer to 70 cents a share, winning agreement from Accident Compensation Corp. to sell its 7% stake in the South American dairy farm developer. 

Olam today raised its offer from 55 cents, while yesterday NZFSU chairman John Parker advised shareholders not to sell as the South American dairy farm developer negotiated new equity input from an unnamed third party.

Following Olam's mid-July offer for NZFSU, the Uruguay Agriculture Group made an offer of 60 cents a share, though Parker again advised shareholders to await the outcome of equity negotiations which have been carried out over the past year.

At yesterday's NZFSU annual result announcement of a US$10.4 million loss, Parker said while the rationale of establishing New Zealand style dairy farming in lower-land cost Uruguay hasn't been faulted, its structure and performance hasn't been good enough.

The introduction of new equity from a suitor who doesn't want control of the company would allow it to apply capital fertiliser and boost irrigation levels that would in turn increase production to profitable levels.

ACC's sale of just over 17 million shares will realise more than NZ$12 million, and takes Olam's ownership of NZFSU to almost 25.5%. PGG Wrightson has conditionally agreed to sell its 11.5% stake in NZFSU to Olam.

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