NZ Farming Systems Uruguay (NZFSU) is advising shareholders to wait for a target company statement before deciding whether to sell shares to Singapore's Olam International, which has initiated a takeover offer for the company.

Olam said it was offering to buy the 81.55 per cent of shares, the deal being worth S$109.6 million; that is 55c a share, and PGG Wrightson said it had signed an agreement with Olam for its 28.1m shares, representing a stake of
11.5% in NZFSU.

NZFSU said shareholders would receive the takeover offer and related documentation in the next two weeks and it would issue a target company statement including an independent appraisal report on the merits of the offer, or a summary of that report.

Olam is a global integrated supply chain manager of agricultural products and food ingredients, and has a 25 percent stake in independent cheese maker Open Country Cheese in New Zealand. It bought an initial 14.35% tranche in NZFSU in September last year and a further 4.1% from the receivers of Rural Portfolio Investments in May.

NZFSU, managed under contract by subsidiaries of PGG Wrightson said that it was well advanced in negotiations with PGG Wrightson for the repurchase of the management agreement. NZFSU said that the directors recommend shareholders to await receipt of the target company statement before making any decision regarding the offer.

PGG Wrightson said it had formed NZFSU in 2006 to provide an opportunity for farmers and farming investors to participate in emerging agricultural opportunities in South American countries like Chile, Uruguay, Brazil and Argentina.

Currently, Olam is the largest shareholder in NZFSU with an 18.45 per cent stake and its offer price of 55c cash per NZFSU share represented a 38 %premium over the three-month average trading price of 40.1c

NZFSU shares climbed as high as $2 in mid-2008 but then collapsed at 35c nine months later.