Singapore's Olam International is to buy PGG Wrightson's stake in NZ Farming Systems Uruguay and has launched a full takeover offer for the dairy farm developer.Olam, which had owned 18.45% of NZ Farming Systems (NZS) already, will pay 55c in its takeover
Singapore's Olam International is to buy PGG Wrightson's stake in NZ Farming Systems Uruguay and has launched a full takeover offer for the dairy farm developer.
Olam, which had owned 18.45% of NZ Farming Systems (NZS) already, will pay 55c in its takeover bid after striking an agreement to buy 28.1 million shares from PGG Wrightson.
The offer represents a 34% premium on the NZS share price of 41c prior to the offer being made and values the company at $134 million.
NZS shares climbed to 53c after coming off a trading halt this morning.
The offer is subject to Olam achieving a minimum 50.1% shareholding in NZS and the approval by the Overseas Investment Office.
PGG Wrightson said today it had entered into a lock-up agreement with Olam for its 11.5% stake in NZS.
The agreement follows Olam’s acquisition of an initial 14.35% stake in NZS in September last year and subsequent purchase of a further 4.1% from the receivers of Rural Portfolio Investments in May 2010.
PGG Wrightson chairman Sir John Anderson said the PGW Board supported the offer in the best interests of its shareholders.
“We remain 100% committed to our core seeds and rural services businesses in Uruguay and the South American region which holds the promise of substantial growth on the back of productivity improvements and adoption of more intensive farming systems,” Sir John said in a statement this morning.
Sir John said Olam’s stated intention to support the capital requirements of NZS was “good news” for NZS, allowing it to complete its planned investments and support its growth trajectory.
PGW said it would continue an ongoing supply and advisory relationship with NZS.
“We view the ongoing relationship between NZS and PGW as an important part of that, as PGW is an efficient supplier of farm inputs and services required by NZS.”
Don't sell
NZS issued a 'don't sell' notice to shareholders today, pending an independent appraisal of Olam's offer. NZS will issue a target company statement within the next two weeks and the directors urged shareholders to wait for the documents before making any decisions.
The company said it was also in advanced discussions with PGG Wrightson about internalisation of the management agreement and entering into a long term preferred supplier agreement.
