Olam ahead in dairy farm bid

NZ Farming Systems Uruguay operation Photo / Supplied

Singapore-based Olam International's takeover play for dairy farm developer NZ Farming Systems Uruguay got a boost yesterday as a rival overseas bidder pulled out.

Olam this week raised its bid from 55c to 70c a share, valuing the NZX-listed company at $171 million.

The increased offer is too hot for Uruguay-based Union Agriculture Group which - before Olam raised its bid - had given notice it intended to make a 60c-a-share offer.

Union Agriculture had intended to launch its formal offer next week but decided against making a bid higher than Olam's offer.

Union Agriculture chairman Juan Sartori said the company was conservative and had other opportunities where it could apply its funds and resources at better terms in Uruguay.

"While we believe [NZ Farming Systems] was potentially very good for [Union Agriculture] and that we could make it a successful operation, the opportunity does not look so good for us at that price," Sartori said.

An independent adviser's report by Grant Samuel valued the company in a range of 65-79c a share.

The company was interested in working with NZ Farming Systems or Olam, depending on the outcome of that company's bid, and was happy to explore other opportunities for co-operation, Sartori said.

"I think that with Uruguayan farmland beginning to attract a premium and recognition from New Zealand ... our country is a good place for investment."

Olam's offer closes on September 24 and is conditional on having more than 50 per cent of voting rights. The Singapore company says the New Zealand Overseas Investment Office had granted consent for its offer.