NZ Farming Systems jumps on Olam takeover bid
(BusinessDesk) 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% of the South American dairy farming operation.
Olam is offering 75 cents a share, or $25.8 million, to mop up the remaining 14% it does not own, a month after the South American dairy farmer missed annual earnings guidance with a full-year loss of $US7.6 million.
Farming Systems shares (NZX: NZS) jumped four cents, to 74 cents, this morning, on a single trade of 3000 shares. The stock started the year at 65 cents.
Olam offered shareholders 70 cents a share last year when it successfully took control of the company.
"Olam believes this is a full and fair price for NZFSU shares, and accordingly the offer price will not be increased," the company says. If it gets to the 90% 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. They claimed the 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 says it expects to dispatch an offer document within 14 to 30 days of today's statement.
In August, Farming Systems says it is considering a pro rata rights issue to raise as much as $US135 million, at about 69 cents per share, which would be supported by Olam.
That funding is needed to meet its capital works programme and operating cash requirements.