New Zealand Farming clarifies bid stance

New Zealand Farming Systems Uruguay (NZFSU) said its board recommendation to shareholders is that they accept the raised offer from Olam International for at least part of their shareholding.

The company said today that some media reports of its decision yesterday had omitted the reference to the option of partial acceptance.

"For clarity, the board believes it is in the interests of shareholders for Olam to achieve a shareholding of more than 50 percent, as this would provide certainty over the funding of the company and completion of the farm development programme," the company said.

"The board also believes that retention of a significant minority shareholding in the company is desirable, as this would enable Olam and other shareholders to share any future upside in the value of the company."

Last Friday Uruguay-based Union Agriculture Group (UAG) pulled out of the bidding for NZFSU, saying it had decided against making a bid above the current offer from Olam International of 70c per share.

Before Olam lifted its offer to 70c, from the 55c it was at previously, UAG had been intending to make a cash offer at 60c a share.

NZFSU said the results from the Fonterra auction platform this week illustrated potential for prices to increase and the independent report by Grant Samuel noted that the value of NZFSU is extremely sensitive to variations in milk prices.

"Irrespective of short-term movements, the board remains of the view that the fundamentals for dairy prices are strong," the company said.

Dairy commodity prices jumped nearly 17 percent overnight at Fonterra's online auction this week, turning around declines over the past four months.

Prices paid for the core product, whole milkpowder, rose 18.8 percent to US$3522 a tonne.

Fonterra directors last month reviewed their forecast payout for 10,500 New Zealand farmers, but left it at $6.90 - $7.10 a kilogram of milksolids, saying there were signs prices would improve later in the year.

Fonterra's global dairy trade manager, Paul Grave, said this week that the auction result appeared to indicate a firmer tone had returned to the market.

- NZPA