Singaporean commodities giant Olam's $37.6 million takeover bid for New Zealand-listed Farming Systems Uruguay crept to just 82.9% in acceptances yesterday.
This slowdown follows the rejection of the offer by a minority of shareholders.
On Monday, Olam had 80% acceptances and the slowdown over the week suggested it might have to consider upping its 70c per share offer.
New Zealand farming Systems Uruguay (NZFSU), which by the time of its listing in December 2007 had raised about $254 million in three issues, is the only New Zealand company with dairy interests in which the public is able to directly buy shares.
If Olam reaches 90% acceptances for NZFSU it can compulsorily acquire the outstanding 10% of shares, but with acceptances appearing to slow, a stalemate could develop.
A group of three NZFSU investors, including spokesman Rob Poole, are in touch with about 90 small investors and say they represent more than 10% of shares, effectively a blocking stake to Olam gaining 90% acceptances.
Mr Poole said the bloc was not supportive of selling at 70c. He said the net asset value of the shares was closer to 85c, citing a recent NZFSU farm in Uruguay having sold for 26% above valuation.
Craigs Investment Partners broker Peter McIntyre said the level of acceptances was "coming down to the wire" and the minority shareholders had become a "spanner in the works" for Olam.
"This could mean Olam will have to reconsider its [70c per share] offer and revise it upwards," he said yesterday.
If that was the case, all shareholders who had accepted the offer at 70c would have to be offered the revised price.
Mr McIntyre said this minority shareholder group was working on the assumption Uruguayan land prices were undervalued, therefore NZFSU's book value was undervalued and it wanted that recognised with a higher takeover offer.
Last September, Olam concluded its majority purchase of NZFSU, having gained 78% acceptances from shareholders. The final offer of 70c a share valued Olam's stake at $133 million at the time.
In late April, Olam advised NZFSU it wanted to increase its stake to 100%, offering $37.6 million for the remaining 22%.
NZFSU is already a subsidiary of Olam and if its 100% takeover was successful it would be delisted and absorbed into Olam, Mr McIntyre said.
At the time of Olam gaining its 78% stake, NZFSU had successfully set up 16 New Zealand-style dairy farms in Uruguay, but large land purchases and consecutive financial losses of almost $38 million had left it short of an estimated $88 million it needed to convert a further 49 properties.
Before making its 100% takeover offer, Olam was expected to inject up to $60 million into cash-poor NZFSU and possibly seek an equity raising estimated at between $35 million and $55 million from shareholders.
