Olam International Bids $78 Million to Take Control of NZ Farming Systems Uruguay

by Dave


Olam International Ltd., the Singapore-based commodity trader, plans to offer NZ$109.6 million ($77 million) to take control of NZ Farming Systems Uruguay Ltd. to add dairy supply for its trading operations.

NZ Farming, which owns dairy farms in Uruguay, jumped 29 percent, the most in almost 17 months, to 53 cents at the 5 p.m. local time close in Wellington.

Olam, which said last month it has $1 billion to spend on acquisitions and investments, currently sources dairy products from Europe, India and North and South America. Uruguay’s dairy industry may benefit from global prices that are forecast to be “generally elevated” over the next five years as demand rises and cost pressures increase, according to Rabobank Groep.

[Uruguay] is a relatively low-cost place to produce milk and if you can get your business’s supply chain right it should be a place where you can make money producing for export into the regional and global market,” Tim Hunt, a global dairy analyst at Rabobank, said from Melbourne today.

Temasek Holdings, owns about 14 per cent of Olam. Kewalram Chanrai Group owns 36.7 per cent and managers of Olam hold about 16 per cent.