Bid for Farming Systems on track

NZ Farming Systems Uruguay. Photo / Supplied

Singapore-listed Olam International's takeover bid for NZ Farming Systems Uruguay is close to success as the deadline looms.

Olam has offered 70c a share for all shares in the NZX-listed company, valuing it at $171 million, conditional on getting more than half the shares.

The offer closes at 5pm this Friday and a notice from Olam to the stock market last Friday said it had reached 46 per cent.

Olam said it would not extend the closing date.

"[NZ Farming Systems] trading was illiquid prior to the announcement of the offer and traded at prices significantly below the offer price," Olam said. "Olam considers that it is likely the [NZ Farming Systems] share price may fall if this offer is unsuccessful."

NZ Farming Systems was set up by rural services company PGG Wrightson to develop dairy farms in Uruguay.

A report from independent adviser Grant Samuel valued the company at 65c-79c a share.

Shares closed at 69c on Friday.

Forsyth Barr analyst John Cairns said it must be odds-on Olam would get over the line

"Normally one would expect a bit of a flurry towards the end of the period especially with a comment like that [about not extending the closing date]," Cairns said.

"You just need to be very conscious that it is a long-term project and that you'll be required to put additional capital [in]."

NZ Farming Systems has said it required about US$60 million ($82.6 million) to complete development of its existing farms.

The independent adviser's report said the company needed capital expenditure of US$62.6 million to complete its development, including US$16.8 million for irrigation and US$11.7 million for milking sheds.

The board of NZ Farming Systems has recommended shareholders accept the offer in respect of at least part of their shareholding to ensure Olam secures the minimum 50.1 per cent shareholding required.

Olam last month posted revenue for the year ending June 30 up 21.7 per cent to S$10.5 billion ($10.83 billion), with net profit up 42.7 per cent at S$359.7 million.