Singaporean commodities giant Olam International has fallen short in its $37.6 million bid to clinch a 90% stake in listed New Zealand Farming Systems Uruguay (NZFSU), which would have completed a 100% takeover.
Including taking its initial 78% stake in NZFSU, Olam has spent $133.8 million in the take-over play, which netted it 85.93% of NZFSU - falling 4.07 % short of acquiring 90% and triggering a compulsory mop-up of the outstanding 10% of shares.
A block of minority shareholders has resisted the 70c-per-share offer made by Olam, insisting NZFSU had more value and the offer should have been higher; but Olam has said it will not increase the offer.
Craigs Investment Partners broker Peter McIntyre said yesterday that once it was known the minority investors effectively held a more than 10% blocking stake, Olam was placed "on the back foot".
"It was always going to be hard to get to 90% with the blocking stake thinking the [70c] offer too low," he said.
With Olam stymied at 85.93% by the offer deadline of June 29, which had been extended, Olam has said it is allowed to buy up to 5% of ordinary NZFSU shares during the next 12 months; which would be close to triggering compulsory acquisition.
Olam could potentially come back to those remaining shareholders with a better offer in the future, or as majority shareholder just concentrate on refinancing NZFSU, which may require recapitalisation of up to $US115 million, Olam has suggested.
The stubborn shareholders' stance appears to have been borne out in some respects, with NZFSU this week chalking up expectations of a profit turnaround, thanks to higher-than-expected US milk prices. The turnaround is $US4.8 million ($NZ5.9 million) difference, from a forecast loss of $US1.9 million to a profit of $US2.9 million.
• In late June Olam agreed to extend its credit limit by up to $US35 million ($NZ42.9 million) to $US85 million to NZFSU.
NZFSU subsequently repaid half of a total $US16 million in overseas bank loans to a Spanish bank, while the need to repay the $US8 million balance to a Uruguayan bank was waived and the loan extended.
