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Olam lifts bid for NZ Farming Systems Uruguay

Fuseworks Media
Fuseworks Media

Wellington, Aug 24 NZPA - Olam International Ltd has lifted its takeover bid for New Zealand Farming Systems Uruguay (NZFSU) to 70c a share from 55c and is saying it will not support any other offers that dilute existing shareholders.

Advising of the increased bid today, the Singapore-based commodity company said NZFSU shareholders who had already accepted its offer would, if the offer was successful, receive the 70c price.

NZFSU is already subject to a 60c a share bid from Union Agriculture Group (UAG) and there have been hints of a third bidder.

NZFSU shares rose to 71c on the sharemarket, indicating investors think there is still a possibility of a higher offer.

Olam today noted that the NZFSU board is in negotiations with a potential investor involving a significant issue of new equity.

"Olam is of the view that such a capital raising is likely to be dilutive to existing shareholders, and accordingly is unlikely to vote to support such a transaction."

Olam also outlined its reasons for upping its offer.

It said NZFSU's full year results released on August 23 were in line with its expectations and the company's status as an Uruguayan project of national Interest would provide fiscal benefits.

It also cited the recent internalisation of the management contract with PGG Wrightson Ltd.

"All of the above mentioned information, which have a material impact on the valuation of NZFSU was not available to Olam at the time it gave its notice of initial offer dated July 19, 2010," Olam said.

Olam said that subject to its offer being successful, it would expect to support a capital raising that is fair and equitable to all shareholders.

Yesterday NZFSU's target company statement said the 55c Olam bid was too low, and the company advised shareholders not to accept it.

NZFSU pointed out that UAG had given notice of a competing takeover offer at 60c a share, and said a target company statement for that offer with a recommendation would be provided within two weeks of UAG's formal offer.

Yesterday NZFSU also said there was a prospect the company would be able to raise new equity from a potential investor on terms that were favourable to all shareholders.

Olam said its revised offer price was well within the valuation range determined by the independent appraiser of 64.9c to 79.2c per share.

Olam also owns a stake in Open Country Cheese, and the company has previously said it is developing a global position in the dairy business.

Olam processes, packs, and merchandises commodities ranging from cocoa, rice and cotton to dairy products.

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