Battle for control of New Zealand Farming Systems Uruguay took another twist yesterday when Singapore-based Olam International boosted its initial takeover offer 27% - from 55c per share to 70c per share, eclipsing that of Uruguayan-based Union Agriculture Group's 60c offer last week.
Quick out of the blocks, ACC yesterday announced it had sold its near 7% stake in NZFSU, or 17.1 million shares, to Olam for more than $12 million.
Both initial takeover offers were well below the considered net asset value of NZFSU, whose share value had slumped on the back of extreme weather conditions and variable commodity prices during the past 18 months, but at 70c per share the new offer was now within an independent valuation range, supplied by Grant Samuals, of 65c-79c per share.
NZFSU management have told shareholders not to sell and instead wait for independent valuations on both offers, and the board's subsequent recommendations.
Aside from the two takeover offers, NZFSU management have said they are in discussions with an unnamed potential equity partner considering investment, which would not require control of the company; which operates 16 dairy farms and 31 milking sheds with 14,000 cows in Uruguay.
Craigs Investment Partners broker Peter McIntyre said the "competitive tension would bring out the full value in NZFSU" and more counter offers were likely.
Shares in NZFSU leapt from 63c to 71c following the counter offer yesterday.
"Olam are getting serious and upping the stakes for all concerned," Mr McIntyre said.
He noted any shareholder who had accepted its initial 55c offer would receive 70c.
NZFSU reported a much improved full-year result on Monday; underpinned by revenue increasing from $22.5 million the year before, to $32 million.
It dragged back its previous full-year loss of $23 million to a loss of $14.8 million.
Mr McIntyre said the latest 70c offer was valuing NZFSU "toward the top end" of estimates, but more counter offers were likely.
Olam launched its first offer for NZFSU in mid-July, offering 55c a share, totalling about $110 million, while Union Agriculture Group jumped in on August 16 with a counter offer of 60c a share, valued at $146 million.
The Olam offer was prompted after it bought PGG Wrightsons 11.5% stake in NZFSU for $15.5 million; but it must gain 50% shareholder approval for that deal to go through, which would take its stake to almost 30%.
Both Union Agriculture and Olam's offers are subject to them achieving a minimum 50.1% stake in NZFSU, and gaining approval from New Zealand's Overseas Investment Office.
