A rival surprise takeover bid for New Zealand Farming Systems Uruguay - worth $146 million - has been lodged with the New Zealand stock exchange by one of Uruguay's largest agricultural companies.
Two overseas companies are now competing for control of NZFSU, which has established 31 milking sheds and 400 jobs in Uruguay.
However, both offers are markedly below NZFSU's net asset value.
Singaporean-based Olam International launched its offer for NZFSU in mid-July, offering 55c a share, totalling about $110 million, but yesterday Union Agriculture Group Corp showed its hand in a counter-offer of 60c a share, valued at $146 million.
Across the Tasman yesterday, a similar double agri-business takeover bid was in play.
AWB is in negotiations for a share-based merger with GrainCorp to create a $A2 billion ($NZ2.52 billion) company, but had just received a bid which values it at $A1.24 billion ($NZ 1.56 billion) from Canadian fertiliser company Agrium.
AWB shares were up more than 30% at $A1.43.
Craigs Investment Partner broker Peter McIntyre said the 60c Uruguayan bid for NZFSU was a surprise and likely to "throw a spanner in the works" of Olam's bid, given shareholders would be unlikely to sell at 55c when 60c was on offer.
He noted NZFSU's net asset value was about 90c a share, but Union Agriculture executive chairman Juan Sartori said 60c a share represented a 46% premium on the July 17 trading price, before the Olam bid, of 41c.
After the Olam bid, NZFSU's share price rose more than 30% to 57c and yesterday surged almost 9% to 63c.
Mr Sartori was seeking up to 100% of NZFSU, but said in a statement: "Our objective is to acquire a controlling stake in NZFSU and we are content to achieve ownership of 50.1% and have NZFSU remain listed on the NZX.
"We believe combining UAG management expertise and local knowledge in Uruguay, with NZFSU's expertise and experience in dairy farming, will create significant opportunities for growth.
"NZFSU could become one of the most successful dairy operations in the world," Mr Sartori said.
Following the new offer yesterday, NZFSU management reiterated earlier statements to shareholders recommending they do not sell, to either Olam or Union Agriculture, and await separate, independent reports on the respective offer; with Olam's due first on Monday, when NZFSU will also post its annual result.
Union Agriculture has been involved in South American agricultural projects for more than 30 years.
It began acquiring Uruguayan land in 2005, initially to go into niche-market olive, blackberry and honey production, but with a second phase of investment targeting large-scale ventures and grain, Mr McIntyre said.
Union Agriculture has built up more than 50,000ha of Uruguayan land under production and while it remained a private company, it has institutional investors and had talked in the past of listing internationally on a stock exchange.
The Olam offer was prompted after it bought PGG Wrightson's 11.5% stake in NZFSU for $15.5 million, which took its stake to almost 30%.
Both Union Agriculture and Olam's offers are subject to them achieving a minimum 50.1% stake in NZFSU, and gaining approval from New Zealand's Overseas Investment Office.
Late last week, NZFSU was granted a $NZ28 million-$NZ35 million tax concession under Uruguayan financial laws.
