The potential buyer of New Zealand Farming Systems Uruguay, Olam International of Singapore, says the farm development company has the expertise that fits with its strategy to invest in low-cost-producing countries.
Olam, which has a stake of 18.5% in NZFS Uruguay, is making a takeover bid worth $110 million.
It has the support of another shareholder, PGG Wrightson, giving it 30%.
The general manager of Strategic Investments at Olam, Venkataraman Krishnan, says Uruguay has a comparative advantage in dairy farming and therefore the capacity to produce dairy products better and more cheaply.
Mr Krisnan says Farming Systems' expertise has the potential to take advantage of Uruguay's conditions and become a very cost-competitive dairy producer.
He says Olam wants to expand Farming Systems' current farming operations and land bank, and back it up using Olam's strengths in the global dairy industry as well as its financial muscle.
Last month, Olam said it had $US1 billion to spend on acquisitions and investments. It currently sources dairy products from Europe, India and North and South America.
NZ Farming Systems Uruguay has appointed Grant Samuel to carry out an appraisal report of the bid.