Olam makes new offer for 100% of NZX Farming Systems

Wednesday 3rd October 2012

Singaporean commodity group Olam International has renewed its attempt to take full control of NZ Farming Systems Uruguay with a slightly sweeter offer than what it put on the table last year to secure 86 percent of the South American dairy farming operation.

Olam is offering 75 cents a share, or $25.8 million, to mop up the remaining 14 percent of Farming Systems it doesn't own, a month after the South American dairy farmer missed annual earnings guidance with a full-year loss of US$7.6 million.

The offer is a 7.1 percent premium to the current trading price of 70 cents, which is what it offered shareholders last year when it successfully took control of the company.

"Olam believes this is a full and fair price for NZSFU shares, and accordingly the offer price will not be increased," the company said in a statement. If it gets to the 90 percent target to enforce compulsory acquisition of the remaining shares it plans to delist the company.

The Singaporean full takeover bid was blocked last year by a group of minority investors who were holding out for a bigger payday. The group claimed the company's net asset value was closer to 85 cents a share, which was justified on increasing land prices in Uruguay, high milk prices and the management of Farming Systems.

That was at odds with the independent adviser's report by Grant Samuel, which found the 70 cents a share offer was above the 60 cents to 69 cents valuation range.

Farming Systems net tangible assets were 78.9 cents per share, according to NZX data.

Olam said it expects to dispatch an offer document within 14 to 30 days of today's statement.

In August, Farming Systems said it was considering a pro rata rights issue to raise as much as US$135 million, at about 69 cents per share, which would be supported by Olam. That funding is needed to meet its capital works programme and meet operating cash requirements, it said.

BusinessDesk.co.nz

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