Bidder pulls out of running for NZFS

NZ Farming Systems Uruguay operation Photo / Supplied

Union Agriculture Group has quit the bidding for NZ Farming Systems Uruguay after rival suitor Olam International of Singapore trumped its price.

UAG's move leaves Olam in the box seat after it raised its offer to 70 cents from 55 cents and won acceptances from the Accident Compensation Corporation for its seven per cent stake.

All up it has acceptances that would give it 37 per cent and its proposal is dependent on achieving a controlling stake.

UAG chairman Juan Sartori said the company has decided against making a higher bid.

"We are a conservative company and we currently have other opportunities where we can apply our funds and resources in Uruguay at better terms," he said.

"While we believe NZFSU was potentially very good for UAG and that we could make it a successful operation, the opportunity does not look so good for us at that price."

NZFSU chairman John Parker said all shareholders should hold off selling their shares to any buyer until negotiations with an unnamed third party have been completed.

Parker said the mystery potential partner was prepared to put equity into NZFSU that will enable it to complete capital fertiliser applications, as well as install irrigation systems on its farms.

Such actions will bring production levels, and profits, up to those of the company's best Uruguay farms Parker said. The alternate suitor did not want control of NZFSU he said, recognising that while the structure and implementation of the dairy operation may be faulted, the rationale behind the establishment of the corporate model had not been faulted.

Satori said UAG remained interested in working with NZFSU or Olam, depending on the outcome of the Olam bid.

"With Uruguayan farmland beginning to attract a premium and recognition from New Zealand and other significant international agri-sector nations that our country is a good place for investment," he said.