Olam International, a Singapore-based commodity producer, raised its takeover offer 27% after NZ Farming Systems Uruguay said the first bid was too low. Shares rose 11%.

Olam increased its bid to 70 New Zealand cents a share from 55 cents, valuing NZ Farming at NZ$171 million ($893 million), according to a filing with the New Zealand stock exchange. The new offer beats a 60 cents-a-share bid plan announced last week by Union Agriculture Corp., a Uruguayan landowner.

 

NZ Farming yesterday rejected Olam’s first offer, saying an independent valuation of the company by Grant Samuel valued the shares at between 65 cents and 79 cents. The Christchurch-based company also said it was in talks with an investor, which it didn’t identify, that may provide funding in exchange for a minority stake.

 

“Olam is of the view that such a capital raising is likely to be dilutive to existing shareholders, and accordingly is unlikely to support such a transaction,” the company said in a statement to the Singapore stock exchange today.

 

Shares in NZ Farming, which is based in New Zealand and owns dairy farms in South America, rose 7 cents to 70 cents at the 5 p.m. market close in Wellington. The gain was the most since Olam announced its bid on July 19.

 

Olam owns 18.5% of NZ Farming and said on July 19 it has an agreement with PGG Wrightson Ltd. to buy its holding, giving it a 30% stake.

 

NZ Farming had also said Olam’s offer included plans to change its business model, which would reduce NZ Farming’s ability to capitalize on the positive outlook, and had insufficient detail on funding future developments.

 

NZ Farming today reiterated that shareholders shouldn’t sell their shares. Still, Accident Compensation Corp., a New Zealand government-owned investor, today said it will accept Olam’s offer for its 7% stake, according to a filing to the New Zealand stock exchange.