Olam eyes NZ Farming Systems Uruguay's foregone shares takeover

Share in NZFSU would increase to 100% at additional investment of S$106.78mln if offer materialises.

Olam International Limited (Olam) has notified NZ Farming Systems Uruguay Limited (NZFSU) of its intention to make a cash offer at NZ$0.55 (S$0.54) per share for all of the shares in NZFSU that it does not already own (the Offer).

Olam is currently the largest shareholder in NZFSU with an 18.45% shareholding following the purchase of shares in NZFSU in September 2009 and May 2010.

The Offer is subject to certain conditions, including Olam achieving a minimum 50.1% shareholding in NZFSU post the Offer and the approval by the Overseas Investment Office, according to an Olam announcement.

Olam’s offer price of NZ$0.55 (S$0.54) cash per NZFSU share represents a 38% premium over the 3-month average trading price of NZ$0.401 (S$0.39) and provides all NZFSU shareholders with the opportunity to realise a significant premium for their shares. If Olam receives full acceptance of the Offer, its shareholding in NZFSU would increase from 18.45% to 100% at an additional investment of NZ$109.6 million (S$106.78 million). This additional investment will be funded by the Company through a combination of internal accruals and borrowings.

The Offer has the support of NZFSU’s second largest shareholder, PGG Wrightson Limited (PGW) who holds 11.5% of NZFSU shares and is New Zealand’s leading rural services company. Olam has concurrently entered into a “lock-up” agreement with PGW whereby PGW has agreed to accept the Offer in respect of its entire shareholding.

Subject to the success of the Offer, Olam would anticipate undertaking a review of NZFSU’s strategy and capital requirements in a timely manner.

Olam expects to dispatch the offer document within 14 to 30 days from the date of this press release. In accordance with New Zealand Takeovers Code, the NZFSU board will obtain an independent adviser’s report in relation to the Offer.